Office of the Revisor of Statutes
Minnesota Session Laws - 2000, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 456-S.F.No. 1870
An act relating to motor vehicles; regulating motor
vehicle fuel franchises and marketing agreements;
amending Minnesota Statutes 1998, section 80C.01,
subdivision 4, and by adding subdivisions; proposing
coding for new law in Minnesota Statutes, chapter 80C;
proposing coding for new law as Minnesota Statutes,
chapter 80F.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1998, section 80C.01,
subdivision 4, is amended to read:
Subd. 4. (a) "Franchise" means (a) (1) a contract or
agreement, either express or implied, whether oral or written,
for a definite or indefinite period, between two or more persons:
(1) (i) by which a franchisee is granted the right to
engage in the business of offering or distributing goods or
services using the franchisor's trade name, trademark, service
mark, logotype, advertising, or other commercial symbol or
related characteristics;
(2) (ii) in which the franchisor and franchisee have a
community of interest in the marketing of goods or services at
wholesale, retail, by lease, agreement, or otherwise; and
(3) (iii) for which the franchisee pays, directly or
indirectly, a franchise fee; or
(b) (2) a contract, lease, or other agreement, either
express or implied, whether oral or written, for a definite or
indefinite period, between two or more persons, whereby the
franchisee is authorized, permitted, or granted the right to
market motor vehicle fuel using at retail under the franchisor's
trade name, trademark, service mark, logotype, advertising, or
other commercial symbol or related characteristics for which the
franchisee pays a franchise fee owned or controlled by the
franchisor; or
(c) (3) the sale or lease of any products, equipment,
chattels, supplies, or services to the purchaser, other than the
sale of sales demonstration equipment, materials or samples for
a total price of $500 or less to any one person, for the purpose
of enabling the purchaser to start a business and in which the
seller:
(1) (i) represents that the seller, lessor, or an affiliate
thereof will provide locations or assist the purchaser in
finding locations for the use or operation of vending machines,
racks, display cases, or similar devices, or currency operated
amusement machines or devices, on premises neither owned or
leased by the purchaser or seller; or
(2) (ii) represents that the seller will purchase any or
all products made, produced, fabricated, grown, bred, or
modified by the purchaser using, in whole or in part, the
supplies, services, or chattels sold to the purchaser; or
(3) (iii) guarantees that the purchaser will derive income
from the business which exceeds the price paid to the seller; or
(d) (4) an oral or written contract or agreement, either
expressed or implied, for a definite or indefinite period,
between two or more persons, under which a manufacturer, selling
security systems through dealers or distributors in this state,
requires regular payments from the distributor or dealer as
royalties or residuals for products purchased and paid for by
the dealer or distributor.
(e) (b) "Franchise" does not include any business which is
operated under a lease or license on the premises of the lessor
or licensor as long as such business is incidental to the
business conducted by the lessor or licensor on such premises,
including, without limitation, leased departments, licensed
departments, and concessions.
(f) (c) "Franchise" does not include any contract, lease or
other agreement whereby the franchisee is required to pay less
than $100 on an annual basis, except those franchises identified
in paragraph (b) (a), clause (2).
(g) (d) "Franchise" does not include a contract, lease or
other agreement between a new motor vehicle manufacturer,
distributor, or factory branch and a franchisee whereby the
franchisee is granted the right to market automobiles,
motorcycles, trucks, truck tractors, or self-propelled motor
homes or campers if the foregoing are designed primarily for the
transportation of persons or property on public highways.
(h) (e) "Franchise" does not include a contract, lease, or
other agreement or arrangement between two or more air carriers,
or between one or more air carriers and one or more foreign air
carriers. The terms "air carrier" and "foreign air carrier"
shall have the meanings assigned to them by the Federal Aviation
Act, United States Code Appendix, title 49, sections 1301(3) and
1301(22), respectively.
(f) For purposes of this chapter, a person who sells motor
vehicle fuel at wholesale who does not, or is not an affiliate
of a person who, owns or controls the trademark, trade name,
service mark, logotype, or other commercial symbol or related
characteristics under which the motor vehicle fuel is sold at
retail, is not a franchisor or a franchisee, and is not
considered to be part of a franchise relationship.
Sec. 2. Minnesota Statutes 1998, section 80C.01, is
amended by adding a subdivision to read:
Subd. 20. [AFFILIATE.] "Affiliate" means any person who
controls, is controlled by, or is under common control with, any
other person. The term includes, without limitation, partners,
business entities with common ownership, principals of any
business entity, and subsidiaries, parent companies, or holding
companies of any person.
Sec. 3. Minnesota Statutes 1998, section 80C.01, is
amended by adding a subdivision to read:
Subd. 21. [MOTOR VEHICLE FUEL.] "Motor vehicle fuel" means
gasoline of a type distributed for use as a fuel in a
self-propelled vehicle designed primarily for use on public
streets, roads, and highways, but does not include diesel fuel
or specialty fuel.
Sec. 4. Minnesota Statutes 1998, section 80C.01, is
amended by adding a subdivision to read:
Subd. 22. [SPECIALTY FUEL.] "Specialty fuel" means a
gasoline sold (1) by a refiner who directly or through an
affiliate does not own, lease, or have any leasehold or other
possessory rights to the marketing premises; and (2) under a
trademark or trade name that is different from the trademark,
trade name, service mark, logotype, or other commercial symbol
used to identify the marketing premises generally.
Sec. 5. [80C.147] [CHANGE IN OWNERSHIP.]
A motor vehicle fuel franchisor, or an affiliate of such
franchisor, who determines to (1) sell or transfer its interests
in marketing premises occupied by a franchisee, and (2) in
connection with such sale or transfer assigns its interest as a
franchisor in a franchise agreement applicable to such premises,
shall offer to the franchisee occupying the premises those
rights contained in United States Code, title 15, section
2802(b)(3)(D)(iii)(I) or (II). This section expires 12 months
after the day of final enactment.
Sec. 6. [80F.01] [DEFINITIONS.]
Subdivision 1. [SCOPE.] For the purposes of this chapter,
the following terms have the meanings given to them in this
section.
Subd. 2. [AFFILIATE.] "Affiliate" means a person who
controls, is controlled by, or is under common control with, any
other person. Affiliate includes, without limitation, partners,
business entities with common ownership, principals of any
business entity, and subsidiaries, parent companies, or holding
companies of any person.
Subd. 3. [DEALER.] "Dealer" means a person permitted to
market motor vehicle fuel pursuant to a marketing agreement.
Subd. 4. [FACILITY.] "Facility" means the premises which,
under a marketing agreement, are to be used by a dealer in
connection with the sale, consignment, and distribution of motor
vehicle fuel to the public for ultimate consumption.
Subd. 5. [INCENTIVE.] "Incentive" or "incentives" means
any rebates, volume credits, volume discounts, funds for
construction, funds for reimaging, funds for equipment, funds
for fixtures, funds for equipment or fixture upgrades,
equipment, fixtures, or any other money or things of value
provided by or passed through the supplier to a dealer and which
are required by the terms of the agreement between the supplier
and the dealer to be repaid by the dealer if the terms of the
supply contract, whether oral or written, are not met.
Subd. 6. [MARKETING AGREEMENT.] "Motor vehicle fuel
marketing agreement" or "marketing agreement" means any
contract, lease, or other agreement, whether that agreement is
oral or written and whether it is express or implied, between a
supplier or its affiliate and a dealer whereby a dealer is
supplied motor vehicle fuel by a supplier or its affiliate for
marketing from a facility under a brand name, trade name,
service mark, logotype, or other commercial symbol or related
characteristics owned or controlled by the supplier or its
affiliate, or where the supplier or its affiliate authorizes or
permits such use. The term includes any agreement between the
supplier and its affiliate and the dealer to occupy or lease a
facility, but does not include any agreement that meets the
definition of a franchise under chapter 80C.
Subd. 7. [PERSON.] "Person" means a natural person,
corporation, partnership, trust, or other legal entity.
Subd. 8. [SUPPLIER.] "Supplier" means a person other than
a refiner who supplies motor vehicle fuel to a dealer pursuant
to a marketing agreement.
Sec. 7. [80F.02] [REQUIRED DISCLOSURES.]
Subdivision 1. [FORM OF DISCLOSURES.] The disclosures
required by this section must be made in writing by the supplier
or its affiliate to the dealer, and must be made either prior to
the execution of any marketing agreement or as part of the
marketing agreement itself.
Subd. 2. [CONTENT OF DISCLOSURES.] The supplier or its
affiliate must disclose the following information to the extent
it is known to the supplier or affiliate:
(1) the prior three year motor vehicle fuel gallonage
history of the premises, unless previously operated by the same
dealer;
(2) the interest, by ownership, lease, or other means of
control, of the supplier, an affiliate of the supplier, or any
other person, in the facility;
(3) any plans for condemnation, roadway alteration, or
other government action that would materially impact the
dealer's occupation of the facility or the marketing of motor
vehicle fuel from the facility;
(4) any agreements the supplier or affiliate may have to
alter, sell, or otherwise dispose of the facility; and
(5) the name, current address, and current telephone number
of all dealers who have occupied the facility in the three-year
period before the disclosure is made.
Sec. 8. [80F.03] [SURVIVORSHIP.]
Subdivision 1. [DESIGNATED FAMILY MEMBER.] For purposes of
this section, "designated family member" means the spouse,
child, grandchild, parent, brother, or sister of the operator.
Subd. 2. [RIGHT TO SUCCEED TO AGREEMENT.] Any designated
family member of a deceased or incapacitated dealer may succeed
to the marketing agreement if (1) the designated family member
gives the supplier written notice of the intention to succeed to
the agreement within 60 days of the dealer's death; (2) the
designated family member agrees to be bound by the terms and
conditions of a written existing marketing agreement; and (3)
the designated family member is a person who meets the
supplier's reasonable standards. At the request of the
supplier, the designated family member must provide any personal
and financial data that is reasonably necessary to determine
whether the designated family member meets the reasonable
standards of the supplier.
Subd. 3. [STANDARDS.] Reasonable standards used by a
supplier may include, but are not limited to, consideration of
the designated family member's ability and potential to operate
the facility at the same level as the former operator, and of
the designated family member's gasoline marketing experience,
education, creditworthiness, and management experience.
Subd. 4. [WRITTEN AGREEMENT TO BE OFFERED.] If the
marketing agreement under which the deceased or incapacitated
dealer operated the facility was oral, the supplier shall offer
a reasonable written agreement to the designated family member
within 30 days of the designated family member's notification to
the supplier of intent to succeed to the agreement. If the
designated family member does not, within 30 days after
receiving the written agreement from the supplier, either accept
the terms of the offered agreement or object to the terms as
unreasonable, the designated family member shall be deemed to
have waived the right of succession.
Subd. 5. [REFUSAL TO ALLOW SUCCESSION.] If a supplier
believes in good faith that the designated family member does
not meet the supplier's reasonable standards, the supplier shall
notify the designated family member of the refusal to allow
succession and intent to terminate the marketing agreement.
This notice must be provided no more than 90 days after the
supplier receives all personal and financial data requested from
the designated family member. The agreement must not be
terminated less than 90 days after notice is served on the
designated family member.
Subd. 6. [DISPUTE REGARDING RIGHT OF SUCCESSION; BURDEN OF
PROOF.] In determining whether a designated family member failed
to meet a supplier's reasonable standards, the supplier has the
burden of proving that the standards used are reasonable, and
the designated family member has the burden of proving that
those standards that are reasonable have been met.
Subd. 7. [PERMISSIBLE CONDITION ON SUCCESSION.] As a
condition of succession, the supplier may require that
reasonable arrangements be entered into for the payment of rent
or product payment during the interim period from the date of
the dealer's death or incapacity until succession is completed
or the right to succession is terminated.
Sec. 9. [80F.04] [ELIMINATION OF SERVICE BAYS PROHIBITED.]
Subdivision 1. [SERVICE BAYS.] For the purposes of this
section, "service bay" means an enclosed area where automobile
repairs are performed, including, but not limited to,
lubrication, oil change, tire repair, battery charge,
replacement of fan belts, hoses, and wiper blades.
Subd. 2. [PROVISION FOR ELIMINATION OF SERVICE BAYS.] A
marketing agreement that includes a lease of the facility to the
dealer must provide that if the supplier eliminates one or more
service bays during the term of the marketing agreement, the
supplier must first pay to the dealer in cash an amount that
fairly and adequately compensates the dealer for the loss of the
service and repair business.
Subd. 3. [WAIVER.] The provision required by subdivision 2
may not be waived or modified except in a writing signed by the
dealer executed at least 30 days after the execution of the
marketing agreement. The writing must be separate and
independent from the marketing agreement, and shall eliminate
the payment provisions of subdivision 2.
Subd. 4. [LIMITATIONS.] Nothing in this subdivision
prohibits a supplier from altering, modifying, or remodeling a
full-service station, without payment to the dealer, following
the expiration of the franchise relationship based upon
termination or nonrenewal of the franchise relationship in
accordance with United States Code, title 15, section
2802(b)(3)(D).
Sec. 10. [80F.05] [HOURS OF OPERATION.]
A supplier may set forth in a marketing agreement the
required number of hours per day and days per week that the
dealer must maintain the retail outlet open for business.
However, the supplier shall not unreasonably withhold consent to
a modification of such requirements where the dealer can
demonstrate that the modification is reasonable based on a
change of circumstances, including economic conditions.
Sec. 11. [80F.06] [OTHER BUSINESSES ON THE PREMISES.]
The supplier may set forth in the marketing agreement any
prohibitions and limitations on the conduct of any other
businesses at the facility, including a charge for additional
rent where another business is permitted and conducted.
However, the supplier shall not unreasonably withhold consent to
the performance of another business, impose unreasonable
limitations on the dealer's ability to perform any other
business, or charge an unreasonable rent for the conduct of
another business, considering the fair rental value of the site
and any imposition upon the supplier's business.
Sec. 12. [80F.07] [PRICE CONTROLS.]
The price at which the dealer sells products shall not be
fixed, established, or regulated by the supplier or the
marketing agreement.
Sec. 13. [80F.08] [PROMOTIONAL REQUIREMENTS.]
No dealer or supplier shall be required to use any
promotion, premium, coupon, giveaway, or rebate. Except as
otherwise provided by law, nothing herein shall be construed to
prohibit voluntary participation in a promotion, premium,
coupon, giveaway, or rebate.
Sec. 14. [80F.09] [DISPOSITION OF PRODUCT.]
In the event of termination or nonrenewal of the marketing
agreement, whether by mutual agreement or otherwise, the
supplier shall purchase from the dealer products that were
available for sale to the public at the facility and were
purchased from the supplier, provided that the products are
tendered by the dealer no later than 30 days from the date of
the termination or nonrenewal of the marketing agreement. The
payment for the products shall be the then current wholesale
price of the products, minus a reasonable restocking fee for
products moved by the supplier. The payment shall be reduced by
any amount of indebtedness owed by the dealer to the supplier.
If the dealer has in its possession on the date of termination
any products which were supplied by the supplier which have not
been paid for in full, the dealer at its expense shall, within
30 days of the termination or nonrenewal of the marketing
agreement, transfer to the supplier all of such products in a
merchantable condition. The provisions of this section are
subject to valid liens against the products by or on behalf of
other creditors of the dealer.
Sec. 15. [80F.10] [FREE ASSOCIATION.]
No supplier shall restrict or prohibit, directly or
indirectly, the right of free association among dealers for any
lawful purpose. No dealer shall restrict or prohibit, directly
or indirectly, the right of free association among suppliers for
any lawful purpose.
Sec. 16. [80F.11] [RELEASE AND WAIVER.]
No party to a marketing agreement shall require as a
condition of entering into the marketing agreement that the
other party assent to a release or waiver of any rights provided
by this chapter, or include in a marketing agreement a release
of claims. Any such waiver or release is void. The right of
either party to the interposition of counterclaims or
crossclaims shall not be waived by the marketing agreement, and
any such provision is void.
Sec. 17. [80F.12] [SECURITY DEPOSIT.]
A security deposit shall not be required except for the
purpose of securing against loss of or damage to real or
personal property or payment of money due to the supplier or
credit extended to the dealer. Any security deposit required of
the dealer may be satisfied by a letter of credit or the deposit
of cash or a pledge of a savings account or its equivalent in a
banking institution located in Minnesota. In the event that the
security deposit is made by the dealer by depositing cash with
the supplier, the deposit shall earn interest at the rate of six
percent per year which shall accrue to the benefit of the dealer
and be payable to the dealer upon termination of the security
deposit, less any charges to which the supplier is entitled to
collect from the security deposit or interest earned on it. In
the event that the security deposit is made by the pledge of a
savings account, a savings account shall be opened in the joint
name of the supplier and the dealer and neither party shall be
entitled to withdraw the funds without the consent of the other
party; upon termination of the security deposit arrangement, the
principal deposit together with accrued interest at the rate
paid for the account shall be payable to the dealer after
deduction of any charges to which the supplier may be entitled.
Sec. 18. [80F.13] [VIOLATION OF LAW.]
No party to a marketing agreement shall require or
encourage any other party to the marketing agreement to violate
or conspire to violate any state, federal, or local laws.
Sec. 19. [80F.14] [ASSIGNMENT.]
Subdivision 1. [LEASE ARRANGEMENTS.] If a dealer leases a
facility under a marketing agreement with the supplier or its
affiliate, the provisions of this subdivision apply. A supplier
shall not unreasonably withhold or delay its consent to any
assignment or transfer of a marketing agreement. The dealer may
assign the marketing agreement to another person that meets the
reasonable standards of the supplier. A dealer who intends to
assign the marketing agreement shall give the other party notice
of the proposed assignment and shall identify the proposed
assignee. At the time of serving notice of assignment, a dealer
shall promptly provide, at the request of the other party,
personal and financial data that is reasonably necessary to
determine whether the assignment should be honored. If the
supplier who is requested to approve the assignment believes in
good faith that reasonable cause exists for refusing to honor
the assignment, that person shall inform the dealer of the
denial and the reasons for denial within 60 days of receiving
the notice of assignment. A supplier may condition assignment
upon the agreement of the dealer who intends to assign and the
other assignee to be bound by all terms and conditions of the
existing marketing agreement.
Subd. 2. [NONLEASE ARRANGEMENTS.] If a marketing agreement
does not involve the lease of the facility by the dealer from
the supplier, the agreement shall be freely assignable by the
dealer or the supplier, provided that such assignment does not
increase the burdens or obligations of the other party. A
supplier may require an assignee to make reasonable and adequate
credit arrangements for the payment of product delivered. If
the assigning dealer has an incentive obligation to the
supplier, the assigning dealer either shall obtain the consent
of the supplier to the proposed assignment, which consent shall
not be unreasonably withheld, or shall provide reasonable and
adequate security for the benefit of the supplier to assure that
the assignor's incentive obligation to the supplier is met by
the assignee dealer.
Sec. 20. [80F.15] [ASSIGNMENT OF FACILITY LEASE OPTION.]
A supplier or an affiliate of a supplier who has an option
to purchase, or an option to lease or extend the lease of a
facility occupied by a dealer, who determines not to exercise
the option, shall offer to assign or otherwise transfer the
option to the dealer. The supplier may charge the dealer a
reasonable legal and administrative cost for transfer of the
option. Options to purchase, or lease or extend the lease of a
facility created after the effective date of this section are
assignable to the dealer who occupies the facility. If the
dealer exercises the option, the supplier or affiliate is not
liable for the performance of the dealer pursuant to the option
or the underlying lease after the option is exercised.
Sec. 21. [80F.16] [DEALER NOTICE OF TERMINATION.]
A dealer may only terminate a marketing agreement if the
dealer provides 90 days' written notice of termination to the
supplier. On or before the termination date, the dealer shall
repay to the supplier any incentive money that is required to be
repaid to the supplier upon termination pursuant to the terms of
the marketing agreement. The giving of notice of termination
shall not eliminate a claim by the supplier for damages for
breach of contract.
Sec. 22. [80F.17] [ENFORCEMENT.]
Any person aggrieved by a violation of this chapter may
obtain injunctive relief, damages, rescission, or other relief.
It is not a defense to an action for injunctive relief that an
aggrieved person may have adequate remedies at law. A party
shall submit the dispute to binding arbitration in accordance
with the commercial rules of the Minnesota American Arbitration
Association. Injunctive relief shall remain available in a
court of competent jurisdiction where arbitration cannot provide
complete relief to vindicate the rights of either party or where
appropriate to secure rights after arbitration. The court or
arbitrator shall have the discretion to award to the prevailing
party its costs and disbursements. No action may be commenced
under this chapter more than three years after the cause of
action accrued. If the marketing agreement provides for the
right of the supplier to recover attorney fees as the prevailing
party in a suit between the parties, then the dealer shall have
the right to recover attorney fees as the prevailing party in an
action under this marketing agreement or under this chapter.
Sec. 23. [80F.18] [CHOICE OF LAW AND JURISDICTION.]
The laws of the state of Minnesota shall govern any
marketing agreement whereby the dealer is or will be marketing
motor vehicle fuel in Minnesota and venue for all actions shall
be the state of Minnesota. Any condition, stipulation or
provision, including any choice of law provision or any choice
of venue provision, purporting to bind any person who is
acquiring a marketing agreement to be operated in this state to
waive compliance with any provisions of this chapter is void.
Sec. 24. [EFFECTIVE DATE.]
Sections 1 and 2 are effective the day following final
enactment and apply to franchises entered into, amended, or
renewed on or after that date. Any franchise in existence on
the effective date of this act that has no expiration date is
considered to be renewed August 1, 2000, for purposes of the
application of sections 1 and 2.
Sections 4 to 23 are effective on the day following final
enactment for existing written marketing agreements to the
extent allowable by law. Sections 4 to 23 are effective one
year after final enactment for existing oral marketing
agreements, except that sections 8, 12, and 21 are effective the
day following final enactment for existing oral marketing
agreements.
Sections 4 to 23 are effective the day following final
enactment for agreements entered into, modified, renewed, or
extended on or after that date. A marketing agreement with an
indefinite term or no expiration date shall be deemed to be
extended for the purposes of this section if continued after
August 1, 2000.
Presented to the governor May 2, 2000
Signed by the governor May 5, 2000, 10:50 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes