2005 Minnesota Statutes

     325E.0681 Terminations or cancellations. 

    Subdivision 1.    Good cause required.  No equipment 
 manufacturer, directly or through an officer, agent, or employee 
 may terminate, cancel, fail to renew, or substantially change 
 the competitive circumstances of a dealership agreement without 
 good cause.  "Good cause" means failure by an equipment dealer 
 to substantially comply with essential and reasonable 
 requirements imposed upon the dealer by the dealership 
 agreement, if the requirements are not different from those 
 requirements imposed on other similarly situated dealers by 
 their terms.  In addition, good cause exists whenever: 

    (a) Without the consent of the equipment manufacturer who 
 shall not withhold consent unreasonably, (1) the equipment 
 dealer has transferred an interest in the equipment dealership, 
 (2) there has been a withdrawal from the dealership of an 
 individual proprietor, partner, major shareholder, or the 
 manager of the dealership, or (3) there has been a substantial 
 reduction in interest of a partner or major stockholder. 

    (b) The equipment dealer has filed a voluntary petition in 
 bankruptcy or has had an involuntary petition in bankruptcy 
 filed against it that has not been discharged within 30 days 
 after the filing, or there has been a closeout or sale of a 
 substantial part of the dealer's assets related to the equipment 
 business, or there has been a commencement of dissolution or 
 liquidation of the dealer. 

    (c) There has been a change, without the prior written 
 approval of the manufacturer, in the location of the dealer's 
 principal place of business under the dealership agreement. 

    (d) The equipment dealer has defaulted under a security 
 agreement between the dealer and the equipment manufacturer, or 
 there has been a revocation or discontinuance of a guarantee of 
 the dealer's present or future obligations to the equipment 
 manufacturer. 

    (e) The equipment dealer has failed to operate in the 
 normal course of business for seven consecutive days or has 
 otherwise abandoned the business. 

    (f) The equipment dealer has pleaded guilty to or has been 
 convicted of a felony affecting the relationship between the 
 dealer and manufacturer. 

    (g) The dealer has engaged in conduct that is injurious or 
 detrimental to the dealer's customers or to the public welfare. 

    (h) The equipment dealer, after receiving notice from the 
 manufacturer of its requirements for reasonable market 
 penetration based on the manufacturer's experience in other 
 comparable marketing areas, consistently fails to meet the 
 manufacturer's market penetration requirements. 

    Subd. 2.    Notice.  Except as otherwise provided in 
 this subdivision, an equipment manufacturer shall provide an 
 equipment dealer at least 90 days' prior written notice of 
 termination, cancellation, or nonrenewal of the dealership 
 agreement.  The notice must state all reasons constituting good 
 cause for the action and must provide that the dealer has until 
 expiration of the notice period in which to cure a claimed 
 deficiency.  If the deficiency is rectified within the notice 
 period, the notice is void.  The notice and right to cure 
 provisions under this section do not apply if the reason for 
 termination, cancellation, or nonrenewal is for any reason set 
 forth in subdivision 1, clauses (a) to (g). 

    Subd. 3.    Obligation to repurchase.  If a dealership 
 agreement is terminated, canceled, or discontinued, the 
 equipment manufacturer shall pay to the dealer, or credit to the 
 dealer's account if the dealer has an outstanding amount owed to 
 the manufacturer, an amount equal to 100 percent of the net cost 
 of all unused heavy and utility equipment in new condition that 
 has been purchased by the dealer from the manufacturer within 
 the 24 months immediately preceding notification by either party 
 of intent to terminate, cancel, or discontinue the agreement.  
 This amount must include transportation and reasonable assembly 
 charges that have been paid by the dealer, or invoiced to the 
 dealer's account by the manufacturer.  The dealer may elect to 
 keep the merchandise instead of receiving payment, if the 
 contract gives the dealer this right. 

    Subd. 4.    Repair parts.  (a) The manufacturer shall 
 pay the dealer, or credit to the dealer's account if the dealer 
 has an outstanding amount owed to the manufacturer, the 
 following:  

    (1) 95 percent of the current net prices on repair parts, 
 including superseded parts listed in current price lists or 
 catalogs in use by the manufacturer on the date of the 
 termination, cancellation, or discontinuance of the agreement; 

    (2) as to any parts not listed in current price lists or 
 catalogs, 100 percent of the invoiced price of the repair part 
 for which the dealer has an invoice if the parts had previously 
 been purchased by the dealer from the manufacturer and are held 
 by the dealer on the date of the termination, cancellation, or 
 discontinuance of the agreement or received by the dealer from 
 the manufacturer after that date; 

    (3) 50 percent of the most recently published price of all 
 other parts if the price list or catalog is not more than ten 
 years old as of the date of the termination, cancellation, or 
 discontinuance of the agreement; 

    (4) net cost less 20 percent per year depreciation for five 
 years following purchase of all data processing and 
 communications hardware and software the retailer purchased from 
 the wholesaler, manufacturer, or distributor, or an approved 
 vendor of the wholesaler, manufacturer, or distributor, to meet 
 the minimum requirements for the hardware and software as set 
 forth by the wholesaler, manufacturer, or distributor; and 

    (5) an amount equal to 75 percent of the net cost to the 
 retailer of specialized repair tools, including computerized 
 diagnostic hardware and software, and signage purchased by the 
 retailer pursuant to the requirements of the wholesaler, 
 manufacturer, or distributor.  Specialized repair tools or 
 signage that have never been used must be repurchased at 100 
 percent of the retailer's cost.  Specialized repair tools must 
 be unique to the wholesaler's, manufacturer's, or distributor's 
 product line, specifically required by the wholesaler, 
 manufacturer, or distributor, and must be in complete and usable 
 condition.  The wholesaler, manufacturer, or distributor may 
 require by contract or agreement that the retailer resell to the 
 wholesaler, manufacturer, or distributor such specialized repair 
 tools and signage for the amounts established in this section or 
 the amount specified in the dealer agreement or contract or fair 
 market value, whichever is greater. 

    (b) The manufacturer shall pay the dealer, or credit to the 
 dealer's account, if the dealer has an outstanding amount owed 
 to the manufacturer, an amount equal to five percent of the 
 prices required to be paid or credited by this subdivision for 
 all parts, data processing and communications hardware and 
 software, and specialized repair tools and signage returned for 
 the handling, packing, and loading of the parts, data processing 
 and communications hardware and software, and specialized repair 
 tools and signage back to the manufacturer unless the 
 manufacturer elects to perform inventorying, packing, and 
 loading of the parts itself.  Upon the payment or allowance of 
 credit to the dealer's account of the sum required by this 
 subdivision, the title to and right to possess the heavy and 
 utility equipment passes to the manufacturer.  However, this 
 section does not affect any security interest that the 
 manufacturer may have in the inventory of the dealer.  

    Subd. 5.    Payment; interest.  Payment required to be 
 made under this section must be made not later than 60 days from 
 the date the heavy and utility equipment is received by the 
 manufacturer, and if not by then paid, the amount payable by the 
 manufacturer bears interest at the maximum rate allowed by law 
 from the date the agreement was terminated, canceled, or 
 discontinued until the date payment is received by the dealer. 

    Subd. 6.    Notice of intent to return.  In lieu of 
 returning the heavy and utility equipment to the manufacturer, 
 the dealer may advise the manufacturer that the dealer has heavy 
 and utility equipment that the dealer intends to return.  The 
 notice of the dealer's intention to return must be in writing, 
 sworn to before a notary public as to the accuracy of the 
 listing of heavy and utility equipment and that all of the items 
 are in usable condition.  The notice must include the name and 
 business address of the person or business who has possession 
 and custody of them and where they may be inspected.  The list 
 may be verified by the manufacturer.  The notice must also state 
 the name and business address of the person or business who has 
 the authority to serve as the escrow agent of the dealer, to 
 accept payment or a credit to the dealer's account on behalf of 
 the dealer, and to release the heavy and utility equipment to 
 the manufacturer.  The notice constitutes the appointment of the 
 escrow agent to act on the dealer's behalf.  

    Subd. 7.    Manufacturer inspection.  (a) The 
 manufacturer has 30 days from the date of the mailing of the 
 notice under subdivision 6, which must be by certified mail, in 
 which to inspect the heavy and utility equipment and verify the 
 accuracy of the dealer's list.  

    (b) The manufacturer shall, within ten days after 
 inspection: 

    (1) pay the escrow agent; 

    (2) give evidence that a credit to the account of the 
 dealer has been made if the dealer has an outstanding amount due 
 the manufacturer; or 

    (3) send to the escrow agent a "dummy credit list" and 
 shipping labels for the return of the heavy and utility 
 equipment to the manufacturer that are acceptable as returns.  

    Subd. 8.    Payment or credit requirements.  If the 
 manufacturer sends a credit list as provided under subdivision 7 
 to the escrow agent, payment or a credit against the dealer's 
 indebtedness in accordance with this subdivision for the 
 acceptable returns must accompany the credit list.  On the 
 receipt of the payment, evidence of a credit to the account of 
 the dealer, or the credit list with payment, the title to and 
 the right to possess the heavy and utility equipment acceptable 
 as returns passes to the manufacturer.  The escrow agent shall 
 ship or cause to be shipped the heavy and utility equipment 
 acceptable as returns to the manufacturer unless the 
 manufacturer elects to personally perform the inventorying, 
 packing, and loading of the heavy and utility equipment.  When 
 they have been received by the manufacturer, notice of their 
 receipt shall be sent by certified mail to the escrow agent who 
 shall then disburse 90 percent of the payment it has received, 
 less its actual expenses and a reasonable fee for its services, 
 to the dealer.  The escrow agent shall keep the balance of the 
 funds in the dealer's escrow account until it is notified that 
 an agreement has been reached as to the nonreturnables.  After 
 being notified of the agreement, the escrow agent shall disburse 
 the remaining funds and dispose of any remaining heavy and 
 utility equipment as provided in the agreement.  If no agreement 
 is reached in a reasonable time, the escrow agent may refer the 
 matter to an arbitrator who has authority to resolve all 
 unsettled issues in the dispute. 

    Subd. 9.    Provisions of contract supplemented.  This 
 section is supplemental to an agreement between the dealer and 
 the manufacturer covering the return of heavy and utility 
 equipment.  The dealer may elect to pursue either the dealer's 
 contract remedy or the remedy provided in this section.  An 
 election by the dealer to pursue the contract remedy does not 
 bar the dealer's right to the remedy provided in this section as 
 to the heavy and utility equipment not affected by the contract 
 remedy.  Notwithstanding anything contained in this section, the 
 rights of a manufacturer to charge back to the dealer's account 
 amounts previously paid or credited as a discount incident to 
 the dealer's purchase of goods is not affected.  

    Subd. 10.    Death of dealer; repurchase from heirs.  In 
 the event of the death of the dealer or majority stockholder in 
 a corporation operating a dealership, the manufacturer shall, 
 unless the heir or heirs of the deceased agree to continue to 
 operate the dealership, repurchase the merchandise from the heir 
 or heirs upon the same terms and conditions as are otherwise 
 provided in this section.  In the event the heir or heirs do not 
 agree to continue to operate the dealership, it shall be deemed 
 a cancellation or discontinuance of the contract by the dealer 
 under subdivision 1.  

    Subd. 11.    Failure to pay sums specified on cancellation 
 of contracts; liability.  In the event that a manufacturer, 
 upon the cancellation of a dealership agreement, fails or 
 refuses to make payment to the dealer or the dealer's heir or 
 heirs as required by this section, the manufacturer is liable in 
 a civil action to be brought by the dealer or the dealer's heir 
 or heirs for:  (1) 100 percent of the net cost of the heavy or 
 utility equipment; (2) transportation and reasonable assembly 
 charges which have been paid by the dealer; (3) 95 percent of 
 the current net price of repair parts, 100 percent of invoiced 
 prices, and 50 percent of the price of all other parts as 
 provided in subdivision 1; (4) payment for data processing and 
 communication hardware and software, or specialized repair tools 
 or signage as outlined in subdivision 1, paragraph (d); and (5) 
 five percent for handling, packing, and loading, if applicable.  

    Subd. 12.    Exceptions.  Unless a dealer has delivered 
 parts to an escrow agent pursuant to subdivision 1, this section 
 does not require the repurchase from a dealer of a repair part 
 where the dealer previously has failed to return the repair part 
 to the manufacturer after being offered a reasonable opportunity 
 to return the repair part at a price not less than:  (1) 100 
 percent of the net price of the repair part as listed in the 
 then current price list or catalog; (2) 100 percent of the 
 invoiced price; and (3) 50 percent of the most recent published 
 price as provided in subdivision 1. 

    This section does not require the repurchase from a dealer 
 of repair parts that have a limited storage life or are 
 otherwise subject to deterioration, such as rubber items, 
 gaskets, and batteries, unless those items have been purchased 
 from the wholesaler, manufacturer, or distributor within the 
 past two years; repair parts which because of their condition 
 are not resalable as new parts without reconditioning; repair 
 parts which have lost required traceability for quality 
 assurance requirements; and repair parts that were marked 
 nonreturnable or future nonreturnable when the retailer ordered 
 them. 

    HIST: 1989 c 267 s 2; 1991 c 71 s 1-10; 1993 c 13 art 2 s 10; 
 2001 c 72 s 5-9