HF 377

as introduced - 90th Legislature (2017 - 2018) Posted on 01/19/2017 01:30pm

A bill for an act
relating to commerce; regulating franchises; prohibiting disclaimers of violations;
regulating renewals; amending Minnesota Statutes 2016, sections 80C.13,
subdivision 2; 80C.14, subdivisions 2, 3, 4, by adding a subdivision; 80C.17,
subdivision 5; 80C.21.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2016, section 80C.13, subdivision 2, is amended to read:

Subd. 2.

Communications; untrue or omitted material facts.

No person may offer or
sell a franchise in this state by means of any written or oral communication which includes
an untrue statement of a material fact or which omits to state a material fact necessary in
order to make the statements made, in the light of the circumstances under which they were
made, not misleading.

new text begin No person may disclaim a violation of this section through any method or device,
including, but not limited to, contractual disclaimers or "no representation" clauses or by
checklists or other forms completed by the franchisee or prospective franchisee.
new text end

Sec. 2.

Minnesota Statutes 2016, section 80C.14, subdivision 2, is amended to read:

Subd. 2.

Acts constituting.

All franchise contracts or agreements, other than those
classifications of franchises specifically recognized by the commissioner under subdivision
1, and any other device or practice of a franchisor must conform to subdivisions 3 and 4. It
is an unfair and inequitable practice for a person to commit an act specified in subdivisions
3 to deleted text begin 5 deleted text end new text begin 6 new text end .

Sec. 3.

Minnesota Statutes 2016, section 80C.14, subdivision 3, is amended to read:

Subd. 3.

Termination or cancellation.

(a) No person may terminate deleted text begin or deleted text end new text begin , new text end cancel new text begin , or
nonrenew new text end a franchise unless: (i) that person has given written notice setting forth all the
reasons for the termination deleted text begin or deleted text end new text begin , new text end cancellation new text begin , or refusal to renew new text end at least 90 days in advance
of termination deleted text begin or deleted text end new text begin , new text end cancellation, new text begin or nonrenewal, new text end and (ii) the recipient of the notice fails to
correct the reasons stated for termination deleted text begin or deleted text end new text begin , new text end cancellation new text begin , or nonrenewal new text end in the notice within
60 days of receipt of the notice; except that the notice is effective immediately upon receipt
where the alleged grounds for termination deleted text begin or deleted text end new text begin , new text end cancellation new text begin , or nonrenewal new text end are:

(1) voluntary abandonment of the franchise relationship by the franchisee;

(2) the conviction of the franchisee of an offense directly related to the business conducted
pursuant to the franchise; or

(3) failure to cure a default under the franchise agreement which materially impairs the
good will associated with the franchisor's trade name, trademark, service mark, logotype
or other commercial symbol after the franchisee has received written notice to cure of at
least 24 hours in advance thereof.

(b) No person may terminate deleted text begin or deleted text end new text begin , new text end cancel new text begin , or nonrenew new text end a franchise except for good cause.
"Good cause" means failure by the franchisee to substantially comply with the material and
reasonable franchise requirements imposed by the franchisor including, but not limited to:

(1) the bankruptcy or insolvency of the franchisee;

(2) assignment for the benefit of creditors or similar disposition of the assets of the
franchise business;

(3) voluntary abandonment of the franchise business;

(4) conviction or a plea of guilty or no contest to a charge of violating any law relating
to the franchise business; or

(5) any act by or conduct of the franchisee which materially impairs the good will
associated with the franchisor's trademark, trade name, service mark, logotype or other
commercial symbol.

Sec. 4.

Minnesota Statutes 2016, section 80C.14, subdivision 4, is amended to read:

Subd. 4.

deleted text begin Failure deleted text end new text begin Right new text end to renew.

deleted text begin Unless the failure to renew a franchise is for good
cause as defined in subdivision 3, paragraph (b), and the franchisee has failed to correct
reasons for termination as required by subdivision 3, no person may fail to renew a franchise
unless (1) the franchisee has been given written notice of the intention not to renew at least
180 days in advance of the expiration of the franchise; and (2) the franchisee has been given
an opportunity to operate the franchise over a sufficient period of time to enable the
franchisee to recover the fair market value of the franchise as a going concern, as determined
and measured from the date of the failure to renew. No franchisor may refuse to renew a
franchise if the refusal is for the purpose of converting the franchisee's business premises
to an operation that will be owned by the franchisor for its own account. deleted text end new text begin All franchise
relationships entered into on or after July 1, 2017, shall be deemed to be contracts of perpetual
duration that are terminable only for good cause. A franchisor whose franchise agreement
expires may require that a franchisee enter into the franchisor's then-current franchise
agreement upon expiration, but the franchisee shall have a statutory right to renew upon
expiration, even if the franchise agreement at issue contains no renewal right.
new text end

Sec. 5.

Minnesota Statutes 2016, section 80C.14, is amended by adding a subdivision to
read:

new text begin Subd. 6. new text end

new text begin Attempting to disclaim violations of the act. new text end

new text begin It is an unfair and inequitable
practice for a person to attempt to disclaim, by contract, form, or other device, including
but not limited to any choice of law clause, liability for any violations of this act, including
but not limited to this section or section 80C.13.
new text end

Sec. 6.

Minnesota Statutes 2016, section 80C.17, subdivision 5, is amended to read:

Subd. 5.

Limitation on actions.

No action may be commenced pursuant to this section
more than three years after the deleted text begin cause of action accrues deleted text end new text begin violation is discovered by the
franchisee new text end .

Sec. 7.

Minnesota Statutes 2016, section 80C.21, is amended to read:

80C.21 WAIVERS VOID.

Any condition, stipulation or provision, including any choice of law provision, purporting
to bind any person who, at the time of acquiring a franchise new text begin :
new text end

new text begin (1) new text end is a resident of this state deleted text begin , or, deleted text end new text begin ;
new text end

new text begin (2) new text end in the case of a partnership or corporation, new text begin is new text end organized or incorporated under the
laws of this state deleted text begin , or purporting to bind deleted text end new text begin ;
new text end

new text begin (3) in the case of a limited liability company or partnership, has a member or partner
who is a Minnesota resident; or
new text end

new text begin (4) is new text end a person acquiring any franchise to be operated in this state to waive compliance
or which has the effect of waiving compliance with any provision of sections 80C.01 to
80C.22 or any rule or order thereunder is void.

new text begin Void waivers include but are not limited to the types of waivers and disclaimers and
other methods or devices described in section 80C.13, subdivision 2. A person relying upon
a waiver that is found to be void under this section in a civil action or arbitration proceeding
is liable to the franchisee for the franchisee's costs, including reasonable attorney fees,
incurred in defeating the waiver.
new text end