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House Journal: Page 692: Wednesday, March 13, 1996

48   that action of the franchisor is arbitrary or
49   capricious shall rest with the franchisee.
50     3.  Notwithstanding subsection 2, a franchisor may

Page   6

 1   terminate a franchisee upon written notice and without
 2   an opportunity to cure if any of the following apply:
 3     a.  The franchisee or the business to which the
 4   franchise relates is declared bankrupt or judicially
 5   determined to be insolvent.
 6     b.  All or a substantial part of the assets of the
 7   franchise or the business to which the franchisee
 8   relates are assigned to or for the benefit of any
 9   creditor which is subject to chapter 681.  An
10   assignment for the benefit of any creditor pursuant to
11   this paragraph does not include the granting of a
12   security interest in the normal course of business.
13     c.  The franchisee voluntarily abandons the
14   franchise by failing to operate the business for five
15   consecutive business days during which the franchisee
16   is required to operate the business under the terms of
17   the franchise, or any shorter period after which it is
18   not unreasonable under the facts and circumstances for
19   the franchisor to conclude that the franchisee does
20   not intend to continue to operate the franchise,
21   unless the failure to operate is due to circumstances
22   beyond the control of the franchisee.
23     d.  The franchisor and franchisee agree in writing
24   to terminate the franchise.
25     e.  The franchisee knowingly makes any material
26   misrepresentations or knowingly omits to state any
27   material facts relating to the acquisition or
28   ownership or operation of the franchise business.
29     f.  After three material breaches of a franchise
30   agreement occurring within a twelve-month period, for
31   which the franchisee has been given notice and an
32   opportunity to cure, the franchisor may terminate upon
33   any subsequent material breach within the twelve-month
34   period following the third such material breach
35   without providing an opportunity to cure, provided
36   that the action is not arbitrary and capricious.
37     g.  The franchised business or business premises of
38   the franchisee are lawfully seized, taken over, or
39   foreclosed by a government authority or official.
40     h.  The franchisee is convicted of a felony or any
41   other criminal misconduct which materially and
is
42   likely to adversely affects affect the
operation,
43   maintenance, or goodwill of the franchise in the
44   relevant market.
45     i.  The franchisee operates the franchised business
46   in a manner that imminently endangers the public
47   health and safety.
48     Sec. 8.  Section 523H.11, Code Supplement 1995, is
49   amended to read as follows:

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
URL: /DOCS/GA/76GA/Session.2/HJournal/00600/00692.html
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