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House Journal: Page 656: Tuesday, March 18, 1997

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 1   franchisor may refuse to authorize the transfer,
 2   provided that enforcement of the reasonable current
 3   qualifications is not arbitrary or capricious.
 4     (6)  A grant or retention of a security interest in
 5   the franchised business or its assets, or an ownership
 6   interest in the franchisee, provided the security
 7   agreement establishes an obligation on the part of the
 8   secured party enforceable by the franchisor to give
 9   the franchisor notice of the secured party's intent to
10   foreclose on the collateral simultaneously with notice
11   to the franchisee, and a reasonable opportunity to
12   redeem the interests of the secured party and recover
13   the secured party's interest in the franchise or
14   franchised business by paying the secured obligation.
15     m.  A franchisor shall not interfere or attempt to
16   interfere with any disposition of an interest in a
17   franchise or franchised business as described in
18   paragraph "l", subparagraphs (1) through (6).
19     7.  a.  Except as otherwise provided by this
20   section, a franchisor shall not terminate a franchise
21   prior to the expiration of its term except for good
22   cause.  For purposes of this subsection, "good cause"
23   is cause based upon a legitimate business reason.
24   "Good cause" includes the failure of the franchisee to
25   comply with any material lawful requirement of the
26   franchise agreement, provided that the termination by
27   the franchisor is not arbitrary or capricious when
28   compared to the actions of the franchisor in other
29   similar circumstances.  The burden of proof of showing
30   that action of the franchisor is arbitrary or
31   capricious shall rest with the franchisee.
32     b.  Prior to termination of a franchise for good
33   cause, a franchisor shall provide a franchisee with
34   written notice stating the basis for the proposed
35   termination.  After service of written notice, the
36   franchisee shall have a reasonable period of time to
37   cure the default, which in no event shall be less than
38   thirty days or more than ninety days.  In the event of
39   nonpayment of moneys due under the franchise
40   agreement, the period to cure need not exceed thirty
41   days.
42     c.  Notwithstanding paragraph "b", a franchisor may
43   terminate a franchisee upon written notice and without
44   an opportunity to cure if any of the following apply:
45     (1)  The franchisee or the business to which the
46   franchise relates is declared bankrupt or judicially
47   determined to be insolvent.
48     (2)  All or a substantial part of the assets of the
49   franchise or the business to which the franchisee
50   relates are assigned to or for the benefit of any

Iowa General Assembly

Index: House Journal (77th General Assembly: Session 1)

© 1997 Cornell College and League of Women Voters of Iowa

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