Sec. 8. Termination; good cause; notice; opportunity to cure
459 words·~2 min read·
/bill/115/hr/470/ih/section-8·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A franchisor shall not, directly or through an officer, agent, or employee, terminate or cancel a franchise, or substantially change the competitive circumstances of the franchisee, except for good cause shown. A default under one franchise agreement shall not in and of itself constitute a default under another franchise agreement to which the franchisee or an affiliate of the franchisee is a party. Any cross-default provisions are null and void. Prior to termination or cancellation of the franchise, the franchisor shall give the franchisee written notice at least 90 days in advance of the termination.
The notice shall state all of the reasons constituting good cause for termination or cancellation and shall provide that the franchisee has 60 days in which to rectify any claimed defaults. The requirement for 90 days advance written notice for termination shall not apply if the reason for termination is because— the alleged grounds are voluntary abandonment by the franchisee of the franchise relationship, in which event, such notice may be given 15 days in advance of the termination or cancellation; or the conviction of the franchisee in a court of competent jurisdiction of an offense, where the conviction is no longer appealable and the offense is— punishable by a term of imprisonment in excess of 1 year; directly related to the business conduct pursuant to the franchise; or materially impairs the goodwill value of the franchise or the franchised trademark.
In that event, such notice may be given at any time following the date on which the conviction is no longer appealable and shall be effective upon delivery and written receipt of the notice. In no event shall any franchisor collect any financial penalty or fee, however delineated, as a consequence of such conviction. If the reason for termination or cancellation is nonpayment of sums due under the franchise agreement, the franchisee shall be entitled to written notice of such default, and shall have 15 days in which to cure such default from the date of such notice.
For such nonpayment defaults a franchisee has the right to cure 3 times in any 12-month period during the period of the franchise agreement. If the reason for termination or cancellation is violation of any law or regulation relating to an imminent danger to public health or safety the franchisee shall be entitled to immediate written notice and shall have 24 hours following receipt of such notice to cure such violation. A franchisee may terminate a franchise agreement for good cause shown, without any further liability to the franchisor.
Good cause shall include changes to the franchise system or the competitive circumstances of the franchise business, which would cause substantial negative impact or substantial financial hardship to the franchisee in the operation of its franchise.