Minnesota Session Laws - 1987, Regular Session

  

                         Laws of Minnesota 1987 

                        CHAPTER 317-S.F.No. 830 
           An act relating to commerce; regulating terminations, 
          cancellations, failures to renew, and transfers of 
          franchises; amending Minnesota Statutes 1986, section 
          80C.14. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 80C.14, is 
amended to read:  
    80C.14 [UNFAIR PRACTICES.] 
    Subdivision 1.  [PROHIBITION.] No person, whether by means 
of a term or condition of a franchise or otherwise, shall engage 
in any unfair or inequitable practice in contravention of such 
rules as the commissioner may adopt defining as to franchises 
the words "unfair and inequitable."  For the purpose of rules 
defining the words "unfair and inequitable", the commissioner 
may specifically recognize classifications of franchises 
including but not limited to the classifications of motor 
vehicle fuel franchises, motor vehicle franchises, hardware 
franchises, and franchises which require that the franchisee 
make an initial, unfinanced investment in excess of 
$200,000.  Any A violation of this section is enjoinable by a 
court of competent jurisdiction. 
    A temporary injunction may be granted under this section 
without requiring the posting of any bond or security.  A bond 
or security shall be is required if a temporary restraining 
order is granted.  
    Subd. 2.  [ACTS CONSTITUTING.] All franchise contracts or 
agreements, other than those classifications of franchises 
specifically recognized by the commissioner pursuant to under 
subdivision 1, and any other device or practice of a franchisor 
shall must conform to the following provisions subdivisions 3 
and 4.  It shall be deemed is an unfair and inequitable practice 
for any a person to: commit an act specified in subdivisions 3 
to 5. 
    Subd. 3.  [TERMINATION OR CANCELLATION.] (a) terminate or 
cancel a franchise without first giving written notice setting 
forth all the reasons for the termination or cancellation to the 
franchisee at least 60 days in advance of termination or 
cancellation, except that the notice shall be effective 
immediately upon receipt where the alleged grounds are: No 
person may terminate or cancel a franchise unless:  (i) that 
person has given written notice setting forth all the reasons 
for the termination or cancellation at least 90 days in advance 
of termination or cancellation, and (ii) the recipient of the 
notice fails to correct the reasons stated for termination or 
cancellation 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 or 
cancellation 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 goodwill 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 or cancel a franchise except 
for good cause.  "Good cause" shall be means failure by the 
franchisee to substantially to comply with the material and 
reasonable franchise requirements imposed by the franchise 
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 goodwill associated with the franchisor's 
trademark, trade name, service mark, logotype or other 
commercial symbol; or.  
    (c)  fail to renew a franchise unless the franchisee has 
been given written notice of the intention not to renew at least 
90 days in advance thereof and has been given a sufficient 
opportunity to recover the franchisee's investment unless the 
failure to renew is for good cause as defined in clause (b). 
    Subd. 4.  [FAILURE TO RENEW.] 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. 
    Subd. 5.  [WITHHOLDING CONSENT TO TRANSFER.] It is unfair 
and inequitable for a person to unreasonably withhold consent to 
an assignment, transfer, or sale of the franchise whenever the 
franchisee to be substituted meets the present qualifications 
and standards required of the franchisees of the particular 
franchisor. 
    Sec. 2.  [EFFECTIVE DATE.] 
    This act is effective the day following final enactment. 
    Approved May 28, 1987