State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_18B > GS_18B-1305

§18B‑1305.  Cause for termination of franchise agreement.

(a)        Meaning of GoodCause. – Good cause for altering or terminating a franchise agreement, orfailing to renew or causing a wholesaler to resign from such an agreement,exists when the wholesaler fails to comply with provisions of the agreementwhich are reasonable, material, not unconscionable, and which are notdiscriminatory when compared with the provisions imposed, by their terms or inthe manner of enforcement, on other similarly situated wholesaler by thesupplier.  In any dispute over alteration, termination, failure to renew orcausing a wholesaler to resign from a franchise agreement, the burden is on thesupplier to establish that good cause exists for the action.

(b)        Notice of Cause. –At least 90 days before altering, terminating or failing to renew a franchiseagreement for good cause, the supplier must give the wholesaler written noticeof the intended action and the specific reasons for it.  If the cause for thealteration, termination or failure to renew is subject to correction by thewholesaler, and the wholesaler makes such correction within 45 days of receiptof the notice, the notice shall be void.

(c)        Termination forCause without Advance Notice. – A supplier may terminate or fail to renew afranchise agreement for any of the following reasons, and the termination shallbe complete upon receipt by the wholesaler of a written notice of thetermination and the reason:

(1)        Insolvency of thewholesaler, the dissolution or liquidation of the wholesaler, or the filing ofany petition by or against the wholesaler under any bankruptcy or receivershiplaw which materially affects the wholesaler's ability to remain in business.

(2)        Revocation of thewholesaler's State or federal permit or license for more than 30 days.

(3)        Conviction of thewholesaler, or of a partner or individual who owns ten percent (10%) or more ofthe partnership or stock of the wholesaler, of a felony which might reasonablybe expected to adversely affect the goodwill or interest of the wholesaler orsupplier.  The provisions of this subdivision shall not apply, however, if thewholesaler or its existing partners or stockholders shall have the right topurchase the interest of the offending partner or stockholder, and suchpurchase is completed within 15 days of the conviction.

(4)        Fraudulent conductby the wholesaler in its dealings with the supplier or its products.

(5)        Failure of thewholesaler to pay for the supplier's products according to the establishedterms of the supplier.

(6)        Assignment, sale ortransfer of the wholesaler's business or control of the wholesaler without thewritten consent of the supplier, except as provided in G.S. 18B‑1307.

(d)        Absence of GoodCause. – Good cause for alteration, termination or failure to renew a franchiseagreement does not include:

(1)        The failure orrefusal of the wholesaler to engage in any trade practice, conduct or activitywhich would violate federal or State law.

(2)        The failure orrefusal of the wholesaler to take any action which would be contrary to theprovisions of this Article.

(3)        A change in theownership of the supplier or the acquisition by another supplier of thebrewery, brand or trade name or trademark, or acquisition of the right todistribute a product, from the original supplier. (1989, c. 142, s. 1.)