§ 5-55-4 - Franchised dealers and distributors.
SECTION 5-55-4
§ 5-55-4 Franchised dealers anddistributors. – (a) Franchisor's duty of disclosure. A franchisor shall disclose, inwriting, to any prospective franchisee the following information, before anyagreement is concluded:
(1) The gallonage volume history, if any, of the locationunder negotiation for and during the three (3) year period immediately past orfor the entire period which the location has been supplied by the supplier,whichever is shorter.
(2) Projections, if any, as to gallonage consumption at thelocation under negotiation.
(3) The name and last known address of the previous dealersfor the last three (3) years, or for the entire period during which thelocation has been supplied by the supplier, whichever is shorter, and thereason for the termination of each dealer's agreement.
(4) Any legally binding commitments for the sale, demolition,or other disposition of the location in effect prior to the termination date ofthe agreement.
(5) The training programs, if any, and the specific goods andservices the supplier will provide without cost to the dealer.
(6) Full disclosure of any and all obligations which will berequired of the dealer, including, but not limited to, any obligation toexclusively deal in any of the products of the supplier, its subsidiaries orany other company or any advertising and promotional items that the dealer mustaccept.
(7) Full disclosure of all restrictions on the sale,transfer, renewal, and termination of the agreement.
(b) Franchise agreements. Every franchise agreement,as defined in this chapter, is subject to the nonwaivable provisions describedin this subsection, whether or not they are expressly stated in the agreement.
(1) Each retail dealer and each distributor as franchisee hasthe right to cancel a franchise agreement within seven (7) days after the dayon which the agreement was signed, by giving the franchisor written notice ofthe cancellation. Upon giving the franchisor that notice, all money, equipment,and merchandise in satisfactory condition loaned, sold, or delivered to thefranchisee under the agreement shall be returned to the franchisor for fullcredit, or the cash equivalent. If the franchisor is the owner of the realestate upon which the franchisee conducted his or her business, the franchiseeshall deliver full possession of the real estate to the franchisor. Thefranchisee shall pay the franchisor for all lawful indebtedness remaining dueafter the return of merchandise and equipment.
(2) No agreement shall contain any provision which in any waylimits the right of either party to trial by jury, the interposition ofcounterclaims or cross-claims.
(3) The price at which a franchisee sells products shall notbe fixed or maintained by a franchisor, nor shall any person seek to do so, norshall the price of products be subject to enforcement or coercion by any personin any manner. Each agreement shall have the legend, "Nothing in this agreementshall be construed to prohibit a franchisor from suggesting prices andcounseling with franchisees concerning prices. Price fixing or mandatory pricesfor any products covered in this agreement shall be prohibited. A servicestation dealer or wholesale distributor may sell any products listed in thisagreement for a price which he or she alone may decide."
(4) Franchisee may assign the franchise agreement; provided,that the franchisor consents to that assignment, which consent is notunreasonably withheld.
(5) If the franchise agreement requires the franchisee toprovide a cash deposit in advance for the use of the service station ordelivery of fuel, except as advance payment in whole or in part for the productordered, the deposit may be held by the franchisor, may be used by thefranchisor in his or her business, and may be retained for the term of theagreement unless it is sooner terminated. Interest at a rate of at least sevenpercent (7%) shall be paid to the franchisee at least annually. Within ninety(90) days after the termination of the agreement, the deposit shall bereturned, together with any unpaid interest on that deposit at the rate of atleast seven percent (7%) per year.
(6) No agreement shall provide for the use of any promotion,premium, coupon, give-away, or rebate in the operation of the business, exceptthat a dealer may participate in a promotion, premium, coupon, give-away, orrebate sponsored by the franchisor, if the dealer desires.
(c) Termination of franchise agreements. No refiner ordistributor, as franchisor, shall, directly or through any officer, agent oremployee, terminate, cancel, or fail to renew a franchise agreement, except forgood cause. For purposes of this section, "good cause" includes, but is notlimited to:
(1) With respect to franchise agreements where the franchisorleases real property and improvements to the franchisee, the agreement may beterminated; provided, that there is a lawful termination of lease, license, orother non-ownership under which the franchisor shall be entitled to possessionor control of that real property and improvements.
(2) Mutual agreement to terminate.
(3) Criminal misconduct or violation of law relating to thebusiness or premises of the dealer.
(4) Fraud, which includes, but is not limited to, thefollowing:
(i) Adulteration of the franchisor's products;
(ii) Commingling of funds;
(iii) Misleading or misbranding of gasoline;
(iv) Trademark violations;
(v) Intentionally overcharging or deceiving customers as torepairs, which are not needed;
(vi) Intentionally deceiving the franchisor regarding a termof the term of the lease;
(5) Failure of the dealer to open for business for anunreasonable period of time; provided, that the failure is not due to mattersbeyond the dealer's control.
(6) Bankruptcy or insolvency of the dealer.
(7) Nonpayment of rent, or loss by the franchisor of itslegal right to grant possession of leased premises to the dealer.
(8) Public condemnation or other public taking.
(9) Nonpayment of merchandise or other indebtedness due tothe franchisor.
(10) Substantial noncompliance with the obligations of thefranchise agreement.
(d) Notice of termination. The franchisor shall givethe franchisee advance written notice of termination, cancellation, or intentnot to renew. Notwithstanding any statute to the contrary, advance noticerequired by this subsection precedes the effective date of the termination,cancellation, or nonrenewal by at least:
(1) Where the asserted cause is substantial noncompliancewith the obligations of the franchise agreement, franchisor shall give thefranchisee seven (7) days from receipt of notice in which to correct anybreach. If the breach has not been corrected within the seven (7) day period,the franchisor may terminate the franchise agreement in accordance with thenotice requirements of the franchise agreement.
(2) One hundred twenty (120) days where the asserted cause isamong those specified in subdivision (c)(1) of this section, or
(3) Seven (7) days where the asserted cause is among thosespecified in subdivisions (c)(3), (c)(4) and (c)(5) of this section; provided,that the franchisee has seven (7) days from receipt of the notice in which tocorrect the matter asserted as cause for terminating the agreement.
(e) Compensation on termination of franchise. Upon thetermination of any franchise, the franchisee shall be entitled to fair andreasonable compensation by the franchisor at the then current wholesale prices,for the franchisee's merchantable inventory, supplies, equipment, andfurnishings purchased by the franchisee from the franchisor; provided, that inthat event the franchisor has the right to apply the proceeds against anyexisting indebtedness owed to the franchisor by the franchisee and; provided,that the repurchase obligation is conditioned upon there being no other claimor liens against the products by or on behalf of other creditors of thefranchisee.