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House Journal: Page 690: Wednesday, March 13, 1996

44   right to develop, a new outlet or location, is not in
45   compliance with the franchisor's then current
46   reasonable criteria for eligibility for a new
47   franchise.  A franchisee determined to be ineligible
48   pursuant to this paragraph shall be afforded the
49   opportunity to seek compensation pursuant to the
50   formal procedure established under paragraph "d",

Page   4

 1   subparagraph (2).  Such procedure shall be the
 2   franchisee's exclusive remedy.
 3     d.  The franchisor has established both of the
 4   following:
 5     (1)  A formal procedure for hearing and acting upon
 6   claims by an existing franchisee with regard to a
 7   decision by the franchisor to develop, or grant to a
 8   franchisee the right to develop, a new outlet or
 9   location, prior to the opening of the new outlet or
10   location.
11     (2)  A reasonable formal procedure for awarding
12   compensation or other form of consideration to a
13   franchisee to offset all or a portion of the
14   franchisee's lost profits caused by the establishment
15   of the new outlet or location.  The procedure shall be
16   deemed reasonable if approved by a majority of the
17   franchisor's franchisees in the United States, either
18   individually or by a representative body.  The
19   procedure shall involve, at the option of the
20   franchisee, least one of the following:
21     (a)  A panel with the authority to make a decision
22   or award in accordance with the formal procedure,
23   comprised of an equal number of members selected by
24   the franchisee and the franchisor, and one additional
25   member to be selected unanimously by the members
26   selected by the franchisee and the franchisor.
27     (b)  A neutral third-party mediator or an
28   arbitrator with the authority to make a decision or
29   award in accordance with the formal procedure.  The
30   procedure shall be deemed reasonable if approved by a
31   majority of the franchisor's franchisees in the United
32   States, either individually or by an elected
33   representative body.
34     (c)  Arbitration of any dispute before neutral
35   arbitrators with the authority to make a decision or
36   award in accordance with the formal procedure and
37   pursuant to the rules of the American arbitration
38   association.  The award of an arbitrator pursuant to
39   this subparagraph subdivision is subject to judicial
40   review pursuant to chapter 679A.
41     e.  The existing franchisee has been granted
42   reasonable territorial rights and the new outlet or
43   location does not violate those territorial rights.
44     2.  A franchisor shall establish and make available
45   to its franchisees a written policy setting forth its

Iowa General Assembly

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

© 1996 Cornell College and League of Women Voters of Iowa

Comments? hjourn@legis.iowa.gov.

Last update: Thu Mar 14 13:30:03 CST 1996
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