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House Journal: Page 2061: Friday, April 28, 1995

Page 9

 1   of a franchise agreement occurring within a twelve-
 2   month period, for which the franchisee has been given
 3   notice and an opportunity to cure, the franchisor may
 4   terminate upon any subsequent material breach within
 5   the twelve-month period without providing an
 6   opportunity to cure, provided that the action is not
 7   arbitrary and capricious.
 8     f. g.  The franchised business or business
premises
 9   of the franchisee are lawfully seized, taken over, or
10   foreclosed by a government authority or official.
11     g. h.  The franchisee is convicted of a felony or
12   any other criminal misconduct which materially and
13   adversely affects the operation, maintenance, or
14   goodwill of the franchise in the relevant market.
15     h. i.  The franchisee operates the franchised
16   business in a manner that imminently endangers the
17   public health and safety.
18     Sec. 5.  Section 523H.8, Code 1995, is amended to
19   read as follows:
20     523H.8  NONRENEWAL OF A FRANCHISE.
21     1.  A franchisor shall not refuse to renew a
22   franchise unless both of the following apply:
23     1. a.  The franchisee has been notified of the
24   franchisor's intent not to renew at least six months
25   prior to the expiration date or any extension of the
26   franchise agreement.
27     2. b.  Any of the following circumstances exist:
28     a. (1)  Good cause exists as defined in
section
29   523H.7, provided that the refusal of the franchisor to
30   renew is not arbitrary or capricious when compared to
31   the actions of the franchisor in other similar
32   circumstances.  For purposes of this section, "good
33   cause" means cause based on a legitimate business
34   reason.
35     b. (2)  The franchisor and franchisee agree not to
36   renew the franchise, provided that upon the expiration
37   of the franchise, the franchisor agrees not to seek to
38   enforce any covenant of the nonrenewed franchise not
39   to compete with the franchisor or franchisees of the
40   franchisor.
41     c. (3)  The franchisor completely withdraws from
42   directly or indirectly distributing its products or
43   services in the geographic market served by the
44   franchisee, provided that upon expiration of the
45   franchise, the franchisor agrees not to seek to
46   enforce any covenant of the nonrenewed franchisee not
47   to compete with the franchisor or franchisees of the
48   franchisor.
49     2.  As a condition of renewal of the franchise, a
50   franchise agreement may require that the franchisee

Iowa General Assembly

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

© 1995 Cornell College and League of Women Voters of Iowa

Comments? hjourn@legis.iowa.gov.

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