2007 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.
History: 1989 c 267 s 2; 1991 c 71 s 1-10; 1993 c 13 art 2 s 10; 2001 c 72 s 5-9