1.1                          A bill for an act 
  1.2             relating to franchises; requiring good cause for 
  1.3             failure to renew a franchise; requiring notice of 
  1.4             action to be taken by a franchisor; amending Minnesota 
  1.5             Statutes 2000, section 80C.14, subdivisions 3, 4. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2000, section 80C.14, 
  1.8   subdivision 3, is amended to read: 
  1.9      Subd. 3.  [~~TERMINATION OR CANCELLATION~~ GOOD CAUSE REQUIRED 
  1.10  FOR TERMINATION, CANCELLATION, FAILURE TO RENEW, OR SUBSTANTIAL 
  1.11  CHANGE IN COMPETITIVE CIRCUMSTANCES.] ~~(a) No person may~~ 
  1.12  ~~terminate or cancel a franchise unless:  (i) that person has~~ 
  1.13  ~~given written notice setting forth all the reasons for the~~ 
  1.14  ~~termination or cancellation at least 90 days in advance of~~ 
  1.15  ~~termination or cancellation, and (ii) the recipient of the~~ 
  1.16  ~~notice fails to correct the reasons stated for termination or~~ 
  1.17  ~~cancellation in the notice within 60 days of receipt of the~~ 
  1.18  ~~notice; except that the notice is effective immediately upon~~ 
  1.19  ~~receipt where the alleged grounds for termination or~~ 
  1.20  ~~cancellation are:~~  
  1.21     ~~(1) voluntary abandonment of the franchise relationship by~~ 
  1.22  ~~the franchisee;~~ 
  1.23     ~~(2) the conviction of the franchisee of an offense directly~~ 
  1.24  ~~related to the business conducted pursuant to the franchise; or~~ 
  1.25     ~~(3) failure to cure a default under the franchise agreement~~ 
  2.1   ~~which materially impairs the good will associated with the~~ 
  2.2   ~~franchisor's trade name, trademark, service mark, logotype or~~ 
  2.3   ~~other commercial symbol after the franchisee has received~~ 
  2.4   ~~written notice to cure of at least 24 hours in advance thereof.~~ 
  2.5      ~~(b) No person may terminate or cancel a franchise except~~ 
  2.6   ~~for good cause.  "Good cause" means failure by the franchisee to~~ 
  2.7   ~~substantially comply with the material and reasonable franchise~~ 
  2.8   ~~requirements imposed by the franchisor including, but not~~ 
  2.9   ~~limited to:~~  
  2.10     ~~(1) the bankruptcy or insolvency of the franchisee;~~ 
  2.11     ~~(2) assignment for the benefit of creditors or similar~~ 
  2.12  ~~disposition of the assets of the franchise business;~~ 
  2.13     ~~(3) voluntary abandonment of the franchise business;~~ 
  2.14     ~~(4) conviction or a plea of guilty or no contest to a~~ 
  2.15  ~~charge of violating any law relating to the franchise business;~~ 
  2.16  ~~or~~ 
  2.17     ~~(5) any act by or conduct of the franchisee which~~ 
  2.18  ~~materially impairs the good will associated with the~~ 
  2.19  ~~franchisor's trademark, trade name, service mark, logotype or~~ 
  2.20  ~~other commercial symbol.~~  No person may terminate, cancel, fail 
  2.21  to renew, or substantially change the competitive circumstances 
  2.22  of a franchise agreement without good cause.  "Good cause" means 
  2.23  failure by a franchisee to substantially comply with essential 
  2.24  and reasonable requirements imposed upon the franchisee by the 
  2.25  franchise agreement, if the requirements are not different from 
  2.26  those requirements imposed on other similarly situated 
  2.27  franchisees by their terms.  In addition, good cause exists 
  2.28  whenever: 
  2.29     (1) there has been a voluntary abandonment of the franchise 
  2.30  relationship by the franchisee; 
  2.31     (2) the franchisee has been convicted of an offense 
  2.32  directly related to the business conducted pursuant to the 
  2.33  franchise; 
  2.34     (3) there has been a failure by a franchisee to cure a 
  2.35  default under the franchise agreement which materially impairs 
  2.36  the good will associated with the franchisor's trade name, 
  3.1   trademark, service mark, logotype, or other commercial symbol 
  3.2   after the franchisee has received notice to cure at least 24 
  3.3   hours in advance; 
  3.4      (4) the franchisee is bankrupt or insolvent; or 
  3.5      (5) there has been assignment of the franchise for the 
  3.6   benefit of creditors or a similar disposition of the assets of 
  3.7   the franchise business. 
  3.8      Sec. 2.  Minnesota Statutes 2000, section 80C.14, 
  3.9   subdivision 4, is amended to read: 
  3.10     Subd. 4.  [~~FAILURE TO RENEW~~ NOTICE.] ~~Unless the failure to~~ 
  3.11  ~~renew a franchise is for good cause as defined in subdivision 3,~~ 
  3.12  ~~paragraph (b), and the franchisee has failed to correct reasons~~ 
  3.13  ~~for termination as required by subdivision 3, no person may fail~~ 
  3.14  ~~to renew a franchise unless (1) the franchisee has been given~~ 
  3.15  ~~written notice of the intention not to renew at least 180 days~~ 
  3.16  ~~in advance of the expiration of the franchise; and (2) the~~ 
  3.17  ~~franchisee has been given an opportunity to operate the~~ 
  3.18  ~~franchise over a sufficient period of time to enable the~~ 
  3.19  ~~franchisee to recover the fair market value of the franchise as~~ 
  3.20  ~~a going concern, as determined and measured from the date of the~~ 
  3.21  ~~failure to renew.  No franchisor may refuse to renew a franchise~~ 
  3.22  ~~if the refusal is for the purpose of converting the franchisee's~~ 
  3.23  ~~business premises to an operation that will be owned by the~~ 
  3.24  ~~franchisor for its own account.~~  Except as otherwise provided in 
  3.25  this subdivision, a franchisor shall provide a franchisee at 
  3.26  least 90 days' prior written notice of termination, 
  3.27  cancellation, or nonrenewal of the franchise agreement.  The 
  3.28  notice must state all reasons constituting good cause for the 
  3.29  action and must provide that the franchisee has 60 days in which 
  3.30  to cure any claimed deficiency.  If the deficiency is rectified 
  3.31  within 60 days, the notice is void.  The notice and right to 
  3.32  cure provisions under this section do not apply if the reason 
  3.33  for termination, cancellation, or nonrenewal is for any reason 
  3.34  set forth in subdivision 3, clauses (1) to (5).