28-4457. Franchise termination, cancellation or nonrenewal; good cause; changes

A. Notwithstanding the terms, provisions or conditions of an agreement or franchise, the following are not good cause for the termination, cancellation or nonrenewal of a franchise:

1. The change of ownership of the franchisee's dealership. This paragraph does not authorize a change in ownership that would have the effect of the sale of the franchise without the manufacturer's or distributor's consent. The consent shall not be unreasonably withheld. The burden of establishing the reasonableness is on the franchisor.

2. The fact that the franchisee refused to purchase or accept delivery of a new motor vehicle, parts or accessories or any other commodity or service not ordered by the franchisee.

B. Notwithstanding the terms, provisions or conditions of an agreement or franchise and subject to subsection F, paragraph 2, in the event of the sale or transfer of ownership of the franchisee's dealership by sale or transfer of the business or by stock transfer to the dealer's qualified spouse, son or daughter, the franchisor shall give effect to the change in the franchise unless the transfer of the franchisee's license under this chapter is denied or the new owner is unable to obtain a license under this chapter, as the case may be.

C. If a franchisor enters into or attempts to enter into a franchise, whether on termination or cancellation, on refusal to renew another franchise or on the establishment of an additional new motor vehicle dealership in a community where the same line-make is then represented, without first complying with this chapter, a license under this chapter shall not be issued to that franchisee or proposed franchisee to engage in the business of selling new motor vehicles that are manufactured or distributed by that franchisor.

D. In determining whether good cause has been established for terminating, canceling or not renewing a franchise, the administrative law judge shall consider the existing circumstances, including the following:

1. Amount of business transacted by the franchisee.

2. Investment necessarily made and obligations incurred by the franchisee in the performance of the franchisee's part of the franchise.

3. Permanency of the investment.

4. Whether it is injurious to the public welfare for the business of the franchisee to be discontinued.

5. Whether the franchisee has adequate new motor vehicle facilities, equipment, parts and qualified management, sales and service personnel to reasonably provide consumer care for the new motor vehicles sold at retail by the franchisee and any other new motor vehicle of the same line-make.

6. Whether the franchisee refuses to honor warranties of the franchisor to be performed by the franchisee if the franchisor reimburses the franchisee for the warranty work performed by the franchisee.

7. Except as provided in subsection A:

(a) Failure by the franchisee to substantially comply with those requirements of the franchise that are determined by the administrative law judge to be reasonable and material.

(b) Bad faith by the franchisee in complying with those terms of the franchise that are determined by the administrative law judge to be reasonable and material.

E. If failure by the franchisee to substantially comply with a reasonable and material provision of the franchise relates to the performance of sales or service by the franchisee, good cause is established if all of the following are true:

1. The franchisor notifies the franchisee of the failure in writing.

2. The notice states that it is provided for failure of performance pursuant to this chapter.

3. The franchisee is provided a reasonable opportunity in which to exert good faith efforts to carry out the provisions of the franchise. The reasonable opportunity provided shall be over a period of at least one hundred eighty days.

4. The franchisee does not demonstrate substantial compliance with the franchisor's performance standards during that period and the failure to demonstrate compliance is not due to factors controlled by the franchisor.

F. In determining whether good cause has been established for entering into an additional franchise for the same line-make the administrative law judge shall consider the existing circumstances including the following:

1. Amount of business transacted by other franchisees of the same line-make in that community.

2. Investment necessarily made and obligations incurred by other franchisees of the same line-make in that community in the performance of their part of their franchises.

3. Whether the franchisees of the same line-make in that community are providing adequate consumer care for the new motor vehicle products of the line-make, including the adequacy of new motor vehicle dealer sales and service facilities, equipment, supply of parts and qualified management, sales and service personnel.

4. The economic impact on existing franchisees of the same line-make due to the addition of a franchise.

5. The effect on the retail motor vehicle business and the consuming public.

28-4457. Franchise termination, cancellation or nonrenewal; good cause; changes

A. Notwithstanding the terms, provisions or conditions of an agreement or franchise, the following are not good cause for the termination, cancellation or nonrenewal of a franchise:

1. The change of ownership of the franchisee's dealership. This paragraph does not authorize a change in ownership that would have the effect of the sale of the franchise without the manufacturer's or distributor's consent. The consent shall not be unreasonably withheld. The burden of establishing the reasonableness is on the franchisor.

2. The fact that the franchisee refused to purchase or accept delivery of a new motor vehicle, parts or accessories or any other commodity or service not ordered by the franchisee.

B. Notwithstanding the terms, provisions or conditions of an agreement or franchise and subject to subsection F, paragraph 2, in the event of the sale or transfer of ownership of the franchisee's dealership by sale or transfer of the business or by stock transfer to the dealer's qualified spouse, son or daughter, the franchisor shall give effect to the change in the franchise unless the transfer of the franchisee's license under this chapter is denied or the new owner is unable to obtain a license under this chapter, as the case may be.

C. If a franchisor enters into or attempts to enter into a franchise, whether on termination or cancellation, on refusal to renew another franchise or on the establishment of an additional new motor vehicle dealership in a community where the same line-make is then represented, without first complying with this chapter, a license under this chapter shall not be issued to that franchisee or proposed franchisee to engage in the business of selling new motor vehicles that are manufactured or distributed by that franchisor.

D. In determining whether good cause has been established for terminating, canceling or not renewing a franchise, the administrative law judge shall consider the existing circumstances, including the following:

1. Amount of business transacted by the franchisee.

2. Investment necessarily made and obligations incurred by the franchisee in the performance of the franchisee's part of the franchise.

3. Permanency of the investment.

4. Whether it is injurious to the public welfare for the business of the franchisee to be discontinued.

5. Whether the franchisee has adequate new motor vehicle facilities, equipment, parts and qualified management, sales and service personnel to reasonably provide consumer care for the new motor vehicles sold at retail by the franchisee and any other new motor vehicle of the same line-make.

6. Whether the franchisee refuses to honor warranties of the franchisor to be performed by the franchisee if the franchisor reimburses the franchisee for the warranty work performed by the franchisee.

7. Except as provided in subsection A:

(a) Failure by the franchisee to substantially comply with those requirements of the franchise that are determined by the administrative law judge to be reasonable and material.

(b) Bad faith by the franchisee in complying with those terms of the franchise that are determined by the administrative law judge to be reasonable and material.

E. If failure by the franchisee to substantially comply with a reasonable and material provision of the franchise relates to the performance of sales or service by the franchisee, good cause is established if all of the following are true:

1. The franchisor notifies the franchisee of the failure in writing.

2. The notice states that it is provided for failure of performance pursuant to this chapter.

3. The franchisee is provided a reasonable opportunity in which to exert good faith efforts to carry out the provisions of the franchise. The reasonable opportunity provided shall be over a period of at least one hundred eighty days.

4. The franchisee does not demonstrate substantial compliance with the franchisor's performance standards during that period and the failure to demonstrate compliance is not due to factors controlled by the franchisor.

F. In determining whether good cause has been established for entering into an additional franchise for the same line-make the administrative law judge shall consider the existing circumstances including the following:

1. Amount of business transacted by other franchisees of the same line-make in that community.

2. Investment necessarily made and obligations incurred by other franchisees of the same line-make in that community in the performance of their part of their franchises.

3. Whether the franchisees of the same line-make in that community are providing adequate consumer care for the new motor vehicle products of the line-make, including the adequacy of new motor vehicle dealer sales and service facilities, equipment, supply of parts and qualified management, sales and service personnel.

4. The economic impact on existing franchisees of the same line-make due to the addition of a franchise.

5. The effect on the retail motor vehicle business and the consuming public.