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House Journal: Page 691: Wednesday, March 13, 1996

46   reasonable criteria to be used by the franchisor to
47   determine whether an existing franchisee is eligible
48   for a franchise for an additional outlet or location.
49     3.  a.  In establishing damages under a cause of
50   action brought pursuant to this section, the

Page   5

 1   franchisee has the burden of proving the amount of
 2   lost profits attributable to the compensable sales.
 3   In any action brought under this section, the damages
 4   payable shall be limited to no more than three years
 5   of the proven lost profits.  For purposes of this
 6   subsection, "compensable sales" means the annual gross
 7   sales from the existing outlet or location during the
 8   twelve-month period immediately preceding the opening
 9   of the new outlet or location less both of the
10   following:
11     (1)  Five Ten percent.
12     (2)  The actual gross sales from the operation of
13   the existing outlet or location for the twelve-month
14   period immediately following the opening of the new
15   outlet or location.
16     b.  Compensable sales shall exclude any amount
17   attributable to factors other than the opening and
18   operation of the new outlet or location.
19     4.  Any cause of action brought under this section
20   must be filed within eighteen months of the opening of
21   the new outlet or location or within three months
22   after the completion of the procedure under subsection
23   1, paragraph "d", subparagraph (2), whichever is
24   later.  An application to vacate the award of an
25   arbitrator under subsection 1, paragraph "d",
26   subparagraph (2), subparagraph subdivision (c), shall
27   be filed as provided in section 679A.12.
28     5.  Upon petition by the franchisor or the
29   franchisee, the district court may grant a permanent
30   or preliminary injunction to prevent injury or
31   threatened injury for a violation of this section or
32   to preserve the status quo pending the outcome of the
33   formal procedure under subsection 1, paragraph "d",
34   subparagraph (2).
35     Sec. 7.  Section 523H.7, subsections 1 and 3, Code
36   Supplement 1995, are amended to read as follows:
37     1.  Except as otherwise provided by this chapter, a
38   franchisor shall not terminate a franchise prior to
39   the expiration of its term except for good cause.  For
40   purposes of this section, "good cause" is cause based
41   upon a legitimate business reason.  "Good cause"
42   includes the failure of the franchisee to comply with
43   any material lawful requirement of the franchise
44   agreement, provided that the termination by the
45   franchisor is not arbitrary or capricious when
46   compared to the actions of the franchisor in other
47   similar circumstances.  The burden of proof of showing

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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