1. Notwithstanding the terms, provisions, or conditions of an agreement or franchise, if a franchisor seeks to establish a new outlet, company-owned store, or carry-out store within an unreasonable proximity of an existing franchisee, the existing franchisee, at the option of the franchisor, shall have either a right of first refusal with respect to the proposed new outlet, company-owned store, or carry-out store or a right to compensation for market share diverted by the new outlet. For the purposes of this section, "unreasonable proximity" as applied to a food establishment franchisor or food service establishment franchisor, including outlets and carry-out stores as defined by section 137A.1, subsection 5, and section 137B.2, subsection 6, includes but is not limited to the shortest distance as measured by the following methods:
a. A three-mile radius, using a straight line measurement, from the center of an already existing franchise.
b. A circular radius, using a straight line measurement, from an existing franchise business which comprises a population of thirty thousand or greater.
2. With respect to a right of first refusal, the parties shall in good faith seek to establish a mutually agreeable price and terms. If the parties are unable to agree, each party shall appoint an independent appraiser. If the independent appraisers are unable to agree upon a price and terms, the independent appraisers shall name a third appraiser to determine the price and terms upon which the right of first refusal may be exercised. The determination of the independent appraiser shall be final and binding, and subject to judicial review under chapter 679A.
If two or more existing franchises are located within an unreasonable proximity to the proposed outlet, the closest franchisee shall have the first right of first refusal, and if declined, the right of first refusal shall pass to the next closest franchisee.
3. If the franchisor does not offer a right of first refusal, the franchisor shall compensate existing franchisees for market share diverted by the opening of the new outlet. If the franchisor and existing franchisees cannot agree upon the proper amount of such compensation, each party shall appoint an independent appraiser. If the independent appraisers are unable to agree, the independent appraisers shall appoint a third appraiser who shall establish the level of compensation. The determination of the independent appraiser shall be final and binding, and subject to judicial review under chapter 679A.
4. The court may grant a permanent or preliminary injunction to prevent injury or threatened injury from the violation or threatened violation of this section.
92 Acts, ch 1134, § 6
© 1996 Cornell College and League of Women Voters of Iowa
Last update: Thu Feb 8 18:14:51 CST 1996