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House Journal: Page 688: Wednesday, March 13, 1996

40   an interest in the franchise by means of a management
41   agreement, lease, profit-sharing agreement,
42   conditional assignment, or other similar device.
43     7.  A transfer by a franchisee is deemed to be
44   approved sixty days after the franchisee submits the
45   request for consent to the transfer unless the
46   franchisor withholds consent to the transfer as
47   evidenced in writing, specifying the reason or reasons
48   for withholding the consent, or the franchisor
49   exercises a contractual right of first refusal.  The
50   written notice must be delivered to the franchisee

Page 2  

 1   prior to the expiration of the sixty-day period.  Any
 2   such notice is privileged and is not actionable based
 3   upon a claim of defamation.
 4     Sec. 2.  Section 523H.5, subsection 12, unnumbered
 5   paragraph 1, Code Supplement 1995, is amended to read
 6   as follows:
 7     The following occurrences shall not be considered
 8   transfers requiring the consent of the franchisor
 9   under a franchise agreement, and shall not result in
10   the imposition of any penalties or make applicable any
11   right of first refusal by the franchisor, provided
12   that the franchisor, except with respect to succession
13   of ownership of a franchise upon the death or
14   disability of a franchisee under paragraph "a", is
15   given at least sixty-days advance written notice of
16   any of the following occurrences:
17     Sec. 3.  Section 523H.5, subsection 12, paragraphs
18   a and f, Code Supplement 1995, are amended to read as
19   follows:
20     a.  The succession of ownership of a franchise upon
21   the death or disability of a franchisee, or of an
22   owner of a franchise, to the surviving spouse, heir
23   child or children, or a partner active in the
24   management of the franchisee franchise unless the
25   successor fails to meet within one year the then
26   current reasonable qualifications of the franchisor
27   for franchisees and the enforcement of the reasonable
28   current qualifications is not arbitrary or capricious,
29   provided that the surviving spouse, child or children,
30   or partner is responsible for maintaining all of the
31   standards and obligations under the franchise
32   agreement during the one-year period preceding
33   qualification as a franchisee.
34     f.  A grant or retention of a security interest in
35   the assets of the franchised business or its assets,
36   or an ownership interest in the franchisee
37   specifically excluding all rights under the franchise
38   agreement, provided the security agreement establishes
39   an obligation on the part of the secured party
40   enforceable by the franchisor to give the franchisor
41   notice of the secured party's intent to foreclose on

Iowa General Assembly

Index: House Journal (76th General Assembly: Session 2)

© 1996 Cornell College and League of Women Voters of Iowa

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