Section 8-21A-4

Termination, cancellation, or nonrenewal of dealer agreement; sales contract, etc.; new or relocated dealership; sale or lease of new equipment.

(a) Except as provided in subsection (d), notwithstanding any dealer agreement, sales contract, franchise agreement, or other agreement by and between dealer and supplier except where grounds for termination or nonrenewal of a dealer's agreement or a change in his or her competitive position are contained in subdivisions (1), (2), (3), (4), (5), or (6) of subsection (b), a supplier shall give a dealer at least 90 days' written notice of the supplier's intent to terminate, cancel, or not renew a dealer agreement or change the dealer's competitive circumstances. The notice shall state all reasons relied upon by supplier to show good cause for the action and shall provide the dealer with a reasonable time in which to correct any claimed deficiency with a minimum of at least six months. Once mutually agreeable steps have been outlined, agreed upon, and implemented, then the notice of termination shall be void. The contractual terms of the dealer agreement shall not expire or a change be made in the dealer's competitive circumstances, without the written consent of the dealer, prior to the expiration of at least 90 days following the notice.

(b) As used in this chapter, a termination by a supplier of a dealer's agreement or a change by the supplier in dealer's competitive circumstances, shall be with good cause when the dealer has done any of the following:

(1) Transferred a controlling ownership interest in the dealership without the supplier's consent.

(2) Made a material misrepresentation to the supplier when applying for the dealer agreement.

(3) Filed a voluntary petition in bankruptcy or has had an involuntary petition in bankruptcy filed against the dealer which has not been discharged within 60 days after the filing; is in default under the provisions of a security agreement in effect with the supplier; or is insolvent or in receivership.

(4) Been convicted of a felony.

(5) Failed to operate in the normal course of business for seven consecutive business days or has terminated the business.

(6) Relocated the dealer's place of business without the supplier's consent.

(7) Consistently engaged in business practices which are detrimental to the consumer or supplier by way of excessive pricing, misleading advertising, failure to provide service and replacement parts or perform warranty obligations.

(8) Consistently failed to comply with the applicable licensing laws pertaining to the products and services being represented for and on supplier's behalf.

(c) No supplier shall base its decision to terminate, cancel, or not renew a dealer agreement or to change the dealer's competitive circumstances on any of the subdivisions of subsection (b) except subdivisions (1), (2), (3), (4), (5), or (6) thereof unless the supplier can demonstrate through written documentation and clear and convincing evidence, the alleged lack of sales demand to support a dealership, alleged misconduct and/or lack of performance or other deficiency of the dealer. Furthermore, supplier shall also show that the reason for the decision to terminate, cancel, or not renew the dealer agreement or change the dealer's competitive circumstances was in no way caused by supplier's actions.

(d) Before termination of the franchise or selling agreement because of the failure of a dealer to meet reasonable marketing criteria or market penetration, the manufacturer, distributor, or wholesaler shall provide written notice of that intention at least one year in advance. After notice, the manufacturer or other entity issuing the notice shall make good faith efforts to work with the dealer to gain the desired market share including, without limitation, reasonably making available to the dealer an adequate inventory of new equipment and parts and competitive marketing programs. The manufacturer or other entity, at the end of the one-year notice period, may terminate or elect not to renew the agreement only upon further written notice specifying the reasons for determining that the dealer failed to meet reasonable criteria or market penetration. The written notice shall specify that termination is effective 90 days from the date of the notice. If the dealer cures the claimed deficiency within the 90-day period, the franchise or selling agreement shall not be terminated.

(e) Any manufacturer, distributor, or wholesaler which intends to establish a new dealership or to relocate a current dealership for a particular product line or make of equipment within the relevant market area of an existing dealership of the same product line or make of equipment shall give a written 90-day notice of that intent by certified mail or statutory overnight delivery, return receipt requested, to the existing dealership. The notice shall include all of the following:

(1) The specific location of the additional or relocated dealership.

(2) The date on or after which the additional or relocated dealership will commence operation at the new location.

(3) The identity of all existing dealerships in whose relevant market area the new or relocated dealership is to be located.

(4) The names and addresses of the dealer and principals in the new or relocated dealership.

(f) A manufacturer, distributor, or wholesaler may sell or lease new equipment for use within this state. If the equipment is prepared for delivery or serviced by a dealer, the manufacturer, distributor, or wholesaler shall reasonably compensate the dealer for the preparation and delivery of the new equipment and pay to the dealer a reasonable commission on the sale or lease of the new equipment which shall not be less than eight percent of the sale price of the equipment. The manufacturer, distributor, or wholesaler, if practicable, shall utilize the dealer in the relevant market area described in this subsection for preparation and delivery. This compensation shall be paid or credited in the same manner as provided in Section 8-21A-10. This subsection shall not be applicable to any liquidation or sale of equipment which has been ordered by any court. For purposes of this subsection, equipment is considered to be used primarily within the relevant market area of a dealer if the new equipment is located or housed at a facility of the user located within that relevant market area.

(Acts 1991, No. 91-721, p. 1401, §4; Act 2003-356, p. 976, §1.)