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House Journal: Page 693: Wednesday, March 13, 1996

50     523H.11  REPURCHASE OF ASSETS.

Page   7

 1     A franchisor shall not prohibit a franchisee from,
 2   or enforce a prohibition against a franchisee,
 3   engaging in any lawful business at any location after
 4   a termination or refusal to renew by a franchisor,
 5   other than a termination for good cause as provided in
 6   section 523H.7 or refusal to renew by a franchisor for
 7   good cause as provided in section 523H.8, unless it is
 8   one which relies on a substantially similar marketing
 9   program as the terminated or nonrenewed franchise or
10   unless the franchisor offers in writing no later than
11   ten business days before expiration of the franchise
12   to purchase the assets of the franchised business for
13   its fair market value as a going concern.  The value
14   of the assets shall not include the goodwill of the
15   business attributable to the trademark licensed to the
16   franchisee in the franchise agreement.  The offer may
17   be conditioned upon the ascertainment of a fair market
18   value by an impartial appraiser.  This section does
19   not apply to assets of the franchised business which
20   the franchisee did not purchase from the franchisor,
21   or the agent of the franchisor.
22     Sec. 9.  Section 523H.12, Code 1995, is amended by
23   striking the section and inserting in lieu thereof the
24   following:
25     523H.12  INDEPENDENT SOURCING.
26     1.  A franchisor may offer franchises as a part of
27   a partially or fully developed turnkey business.
28     2.  A franchisor may require that franchisees
29   purchase from the franchisor, or one or more suppliers
30   selected by the franchisor, either or both of the
31   following:
32     a.  Equipment, products, and services required to
33   establish or operate the franchise and that utilize or
34   embody the franchisor's trade secrets, specialized
35   technology or proprietary processes or ingredients or
36   for which it is not practical to issue specifications
37   or standards.
38     b.  Products purchased for resale by the
39   franchisee, with or without modification or value
40   added by the franchisee, if such products are among
41   the principal products sold by the franchisee.
42     3.  A franchisor shall permit its franchisees to
43   obtain other equipment, products, and services
44   required to establish or operate the franchise from
45   sources chosen by the franchisee, provided that the
46   supplier first demonstrates to the franchisor's
47   reasonable satisfaction that the supplier satisfies
48   all of the following:
49     a.  Meets the franchisor's specifications,
50   standards, and requirements regarding quality,

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.

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