S.F. _____ Section 1. Section 322A.1, subsection 5, paragraph d, Code 1 2009, is amended to read as follows: 2 d. The operation of the franchisee’s business is 3 substantially associated with the franchiser’s trademark, 4 service mark, trade name, advertising, or other commercial 5 symbol designating the franchiser. 6 Sec. 2. Section 322A.1, subsection 5, Code 2009, is amended 7 to read as follows: 8 5. a. “Franchise” means a contract between two or more 9 persons when all of the following conditions are included: 10 a. (1) A commercial relationship of definite duration or 11 continuing indefinite duration is involved. 12 b. (2) The franchisee is granted the right to offer 13 and sell motor vehicles manufactured or distributed by the 14 franchiser. 15 c. (3) The franchisee, as an independent business, 16 constitutes a component of franchiser’s distribution system. 17 d. (4) The operation of franchisee’s business is 18 substantially associated with the franchiser’s trademark, 19 service mark, trade name, advertising, or other commercial 20 symbol designating the franchiser. 21 e. (5) The operation of the franchisee’s business is 22 substantially reliant on franchiser for the continued supply of 23 motor vehicles, parts, and accessories. 24 b. “Franchise” includes a separate agreement between the 25 franchisee and the franchiser which relates to the franchise, 26 whether entered into prior to the date of the franchise, 27 contemporaneously with the franchise, or subsequent to the date 28 of the franchise. 29 Sec. 3. NEW SECTION . 322A.18 Duty of good faith. 30 A franchise imposes on the parties a duty of good faith in 31 performance and enforcement of the franchise agreement. “Good 32 faith” means honesty in fact and the observance of reasonable 33 commercial standards of fair dealing in the trade. 34 Sec. 4. NEW SECTION . 322A.19 Jurisdiction. 35 -1- LSB 5703XC (2) 83 rn/nh 1/ 4

S.F. _____ 1. A condition, stipulation, or provision in a franchise 1 restricting jurisdiction to a forum outside this state is void. 2 2. A condition, stipulation, or provision in a franchise 3 providing that the franchisee consents to the jurisdiction of a 4 forum outside this state is void. 5 3. A civil action or proceeding arising out of a franchise 6 may be commenced wherever jurisdiction over the parties or 7 subject matter exists, even if the franchise limits actions or 8 proceedings to a designated jurisdiction. 9 Sec. 5. NEW SECTION . 322A.20 Choice of law. 10 1. A condition, stipulation, or provision in a franchise 11 requiring the application of the law of another state in lieu 12 of this chapter is void. 13 2. A condition, stipulation, or provision in a franchise 14 that the franchise is to be governed by or construed in 15 accordance with the law of another state is void. 16 Sec. 6. NEW SECTION . 322A.21 Waivers void. 17 A condition, stipulation, or provision in a franchise 18 requiring a franchisee to waive compliance with or relieving a 19 person of a duty or liability imposed by or a right provided by 20 this chapter or order under this chapter is void. This section 21 shall not affect the settlement of disputes, claims, or civil 22 lawsuits arising or brought pursuant to this chapter. 23 Sec. 7. NEW SECTION . 322A.22 Other line-makes. 24 A condition, stipulation, or provision in a franchise 25 prohibiting or restricting the franchisee from continuing 26 another line-make at the dealership or adding an additional 27 line-make to the dealership is void. 28 Sec. 8. NEW SECTION . 322A.23 Customer lists. 29 A condition, stipulation, or provision in a franchise which 30 requires the franchisee to provide its customer lists or 31 service files to the franchiser is void. This section shall 32 not apply to notification by the franchisee to the franchiser 33 of the delivery of a new motor vehicle to a customer or to the 34 submission to the franchiser of a claim for warranty parts, 35 -2- LSB 5703XC (2) 83 rn/nh 2/ 4

S.F. _____ repairs, or services supplied or performed by the franchisee. 1 Sec. 9. NEW SECTION . 322A.24 Construction. 2 This chapter shall be liberally construed to effectuate its 3 purposes. 4 EXPLANATION 5 This bill modifies existing provisions and adds several 6 new provisions to Code chapter 322A, which regulates motor 7 vehicle franchises. The new provisions are similar to current 8 provisions in Code chapter 523H and Code section 537A.10 which 9 govern general franchises operating or granted within the 10 state and which are expressly not applicable to motor vehicle 11 franchises under Code chapter 322A. 12 The bill expands the definition of a franchise beyond a 13 contract meeting certain conditions specified in the chapter to 14 include a separate agreement relating to the franchise, entered 15 into prior to, contemporaneously with, or subsequent to the 16 contract date. 17 The bill imposes on the parties to the franchise a duty of 18 good faith in performance and enforcement of the franchise. 19 The bill addresses franchise jurisdiction, providing that a 20 condition, stipulation, or provision in a franchise restricting 21 jurisdiction to a forum outside this state, or providing that 22 the franchisee consents to the jurisdiction of a forum outside 23 this state, is void. The bill provides that a civil action 24 or proceeding arising out of a franchise may be commenced 25 wherever jurisdiction over the parties or subject matter 26 exists, even if the franchise limits actions or proceedings to 27 a designated jurisdiction. Further, the bill states that a 28 condition, stipulation, or provision in a franchise requiring 29 the application of the law of another state in lieu of Code 30 chapter 322A, or a condition, stipulation, or provision in a 31 franchise that the franchise is to be governed by or construed 32 in accordance with the law of another state, is void. 33 The bill additionally provides that a condition, 34 stipulation, or provision in a franchise requiring a franchisee 35 -3- LSB 5703XC (2) 83 rn/nh 3/ 4

S.F. _____ to waive compliance with or relieving a person of a duty or 1 liability imposed by or a right provided by Code chapter 2 322A is void, but that this shall not affect the settlement 3 of disputes, claims, or civil lawsuits arising or brought 4 pursuant to the Code chapter. Also void would be a provision, 5 stipulation, or provision in a franchise prohibiting or 6 restricting the franchisee from continuing another line-make at 7 a dealership or adding an additional line-make to a dealership, 8 and requiring a franchisee to provide its customer lists or 9 service files to a franchiser. The bill states that this 10 is not applicable to notification by the franchisee to the 11 franchiser of the delivery of a new motor vehicle to a customer 12 or to the submission to the franchiser of a claim for warranty 13 parts, repairs, or services supplied or performed by the 14 franchisee. 15 The bill states that Code chapter 322A is to be liberally 16 construed to effectuate its purposes. 17 -4- LSB 5703XC (2) 83 rn/nh 4/ 4