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House Journal: Page 689: Wednesday, March 13, 1996

42   the collateral simultaneously with notice to the
43   franchisee, and a reasonable opportunity to redeem the
44   interests of the secured party and recover the secured
45   party's interest in the franchise or assets of the
46   franchised business by paying the secured obligation.
47     Sec. 4.  Section 523H.5, subsection 12, paragraph
48   e, Code Supplement 1995, is amended by striking the
49   paragraph.
50     Sec. 5.  Section 523H.5, subsection 13, Code

Page   3

 1   Supplement 1995, is amended to read as follows:
 2     13.  A franchisor shall not interfere or attempt to
 3   interfere with any disposition of an interest in a
 4   franchise or franchised business as described in
 5   subsection 12, paragraphs "a" through "f", provided
 6   that the franchisor may prohibit any disposition of
 7   any interest, directly or indirectly, to a competitor
 8   of the franchisor or a competitor of any of the
 9   franchisor's franchisees.
10     Sec. 6.  Section 523H.6, Code Supplement 1995, is
11   amended to read as follows:
12     523H.6  ENCROACHMENT.
13     1.  If a franchisor develops, or grants to a
14   franchisee the right to develop, a new outlet or
15   location which sells essentially the same goods or
16   services under the same trademark, service mark, trade
17   name, logotype, or other commercial symbol as an
18   existing franchisee and the new outlet or location is
19   in unreasonable proximity to the existing franchisee's
20   outlet or location and has an adverse effect on the
21   gross sales of the existing franchisee's outlet or
22   location, the existing adversely affected franchisee
23   has a cause of action for monetary damages in an
24   amount calculated pursuant to subsection 3, unless any
25   of the following apply:
26     a.  The franchisor has first offered the new outlet
27   or location to the existing franchisee on the same
28   basic terms and conditions available to the other
29   potential franchisee, or, if the new outlet or
30   location is to be owned by the franchisor, on the
31   terms and conditions that would ordinarily be offered
32   to a franchisee for a similarly situated outlet or
33   location.
34     b.  The adverse impact on the existing franchisee's
35   annual gross sales, based on a comparison to the
36   annual gross sales from the existing outlet or
37   location during the twelve-month period immediately
38   preceding the opening of the new outlet or location,
39   is determined to have been less than five ten
percent
40   during the first twelve months of operation of the new
41   outlet or location.
42     c.  The existing franchisee, at the time the
43   franchisor develops, or grants to a franchisee the

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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