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House Journal: Page 2060: Friday, April 28, 1995

Page 8

 1   franchisor is not arbitrary or capricious when
 2   compared to the actions of the franchisor in other
 3   similar circumstances.  The burden of proof of showing
 4   that action of the franchisor is arbitrary or
 5   capricious shall rest with the franchisee.
 6     2.  Prior to termination of a franchise for good
 7   cause, a franchisor shall provide a franchisee with
 8   written notice stating the basis for the proposed
 9   termination.  After service of written notice, the
10   franchisee shall have a reasonable period of time to
11   cure the default, which in no event shall be less than
12   thirty days or more than ninety days.  In the event of
13   nonpayment of moneys due under the franchise
14   agreement, the period to cure need not exceed thirty
15   days.
16     3.  Notwithstanding subsection 2, a franchisor may
17   terminate a franchisee upon written notice and without
18   an opportunity to cure if any of the following apply:
19     a.  The franchisee or the business to which the
20   franchise relates is declared bankrupt or judicially
21   determined to be insolvent.
22     b.  All or a substantial part of the assets of the
23   franchise or the business to which the franchisee
24   relates are assigned to or for the benefit of any
25   creditor which is subject to chapter 681.  An
26   assignment for the benefit of any creditor pursuant to
27   this paragraph does not include the granting of a
28   security interest in the normal course of business.
29     b. c.  The franchisee voluntarily abandons the
30   franchise by failing to operate the business for five
31   consecutive business days during which the franchisee
32   is required to operate the business under the terms of
33   the franchise, or any shorter period after which it is
34   not unreasonable under the facts and circumstances for
35   the franchisor to conclude that the franchisee does
36   not intend to continue to operate the franchise,
37   unless the failure to operate is due to circumstances
38   beyond the control of the franchisee.
39     c. d.  The franchisor and franchisee agree in
40   writing to terminate the franchise.
41     d. e.  The franchisee knowingly makes any material
42   misrepresentations or knowingly omits to state any
43   material facts relating to the acquisition or
44   ownership or operation of the franchise business.
45     e. f.  The franchisee repeatedly fails to
comply
46   with the same material provision of a franchise
47   agreement, when the enforcement of the material
48   provision by the franchisor is not arbitrary or
49   capricious when compared to the franchisor in other
50   similar circumstances.  After three material
breaches

Iowa General Assembly

Index: House Journal (76th General Assembly: Session 1)

© 1995 Cornell College and League of Women Voters of Iowa

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