190.045 Cancellation, termination, refusal to renew franchise -- Notice -- Duty of
1,340 words·~6 min read·
/ky/190-045A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
manufacturer.
(1)Notwithstanding the terms, provisions, or conditions of any franchise or
notwithstanding the terms or provisions of any waiver, a manufacturer shall not
cancel, terminate, or fail to renew any franchise with a licensed new motor vehicle
dealer unless the manufacturer has:
(a)Satisfied the notice requirement of subsection
(4)of this section;
(b)Has good cause for cancellation, termination, or nonrenewal;
(c)Has acted in good faith as defined in KRS 190.010(22); and
(d)Has established the requirements of this subsection in proceedings before the
licensor if the action is protested by the new motor vehicle dealer within:
1. Thirty
(30)days after receiving notice of the cancellation, termination,
or nonrenewal; or
2. Fifteen
(15)days for a termination for a cause listed in subsection (4)(c)
of this section.
When a protest is filed, the licensor shall inform the manufacturer, distributor,
factory branch, or factory representative that a timely protest has been filed and that
the manufacturer, distributor, factory branch, or factory representative shall not
cancel, terminate, or fail to renew any franchise with the licensed new motor
vehicle dealer until the licensor has held a hearing and the licensor has determined
that the manufacturer has met its burden under this section.
(2)Notwithstanding the terms, provisions, or conditions of any franchise or the terms
or provisions of any waiver, good cause shall exist for the purposes of a
termination, cancellation, or nonrenewal when:
(a)There is a failure by the new motor vehicle dealer to comply with a provision
of the franchise which provision is both reasonable and of material
significance to the franchise relationship, provided that the dealer has been
notified in writing of the failure within one hundred eighty
(180)days after
the manufacturer first acquired knowledge of the failure.
(b)If the failure by the new motor vehicle dealer, defined in paragraph
(a)of this
subsection, relates to the performance of the new motor vehicle dealer in sales
or service, then good cause shall be defined as the failure of the new motor
vehicle dealer to comply with reasonable performance criteria established by
the manufacturer, if the new motor vehicle dealer was apprised by the
manufacturer in writing of a failure, and
1. The notification stated that notice was provided of failure of
performance pursuant to this section;
2. The new motor vehicle dealer was afforded a reasonable opportunity,
for a period of not less than six
(6)months, to comply with the criteria;
and
3. The new motor vehicle dealer did not demonstrate substantial progress
toward compliance with the manufacturer's performance criteria during
the designated period.
(3)The manufacturer shall have the burden of proof under this section.
(4)Notwithstanding the terms, provisions, or conditions of any franchise prior to the
termination, cancellation, or nonrenewal of any franchise, the manufacturer shall
furnish notification of a termination, cancellation, or nonrenewal to the new motor
vehicle dealer as follows:
(a)In the manner described in subsection (2)(b) of this section; and
(b)In not less than ninety
(90)days prior to the effective date of the termination,
cancellation or nonrenewal; or
(c)In not less than fifteen
(15)days prior to the effective date of a termination,
cancellation, or nonrenewal with respect to any of the following:
1. Insolvency of the new motor vehicle dealer, or filing of any petition by
or against the new motor vehicle dealer under any bankruptcy or
receivership law;
2. Failure of the new motor vehicle dealer to conduct its customary sales
and service operations during its customary business hours for seven
consecutive business days, except for acts of God or circumstances
beyond the direct control of the new motor vehicle dealer;
3. Fraudulent misrepresentation by the new motor vehicle dealer to the
manufacturer or distributor which is material to the franchise;
4. Conviction of the new motor vehicle dealer, or any owner or operator
thereof, of any felony which is punishable by imprisonment; or
5. Revocation of any license which the new motor vehicle dealer is
required to have to operate a dealership;
(d)In not less than one hundred eighty
(180)days prior to the effective date of a
termination or cancellation where the manufacturer or distributor is
discontinuing the sale of the product line.
(5)Notification under this section shall be in writing by certified mail or personally
delivered to the new motor vehicle dealer; and shall contain:
(a)A statement of intent to terminate, cancel, or not to renew the franchise; and
(b)A statement of the reasons for the termination, cancellation, or nonrenewal;
and
(c)The date on which the termination, cancellation, or nonrenewal takes effect.
(6)Upon the termination, nonrenewal, or cancellation of any franchise, pursuant to this
section, the new motor vehicle dealer shall be allowed fair and reasonable
compensation by the manufacturer for the:
(a)New current model year motor vehicle inventory which has been acquired
from the manufacturer, and which has not been damaged or altered while in
the dealer's possession;
(b)Supplies and parts which have been acquired from the manufacturer;
(c)Equipment and furnishings provided the new motor vehicle dealer purchased
from the manufacturer or its approved sources; and
(d)Special tools.
Fair and reasonable compensation shall be paid by the manufacturer within ninety
(90)days of the effective date of termination, cancellation, or nonrenewal, provided
the new motor vehicle dealer has clear title to the inventory and other items and is
in a position to convey that title to the manufacturer.
(7)In the event of a termination, cancellation, or nonrenewal under this section, and the
new motor vehicle dealer is leasing the dealership facilities from a lessor other than
the manufacturer, or owns the dealership facilities, the manufacturer shall pay a
reasonable rent to the dealer in accordance with and subject to subsection
(8)of this
section.
(a)Reasonable rental value shall be paid only to the extent the dealership
premises are recognized in the franchise and only if they are:
1. Used solely for performance in accordance with the franchise; and
2. Not substantially in excess of those facilities recommended by the
manufacturer.
(b)If the facilities are owned by the dealer, the manufacturer will either:
1. Locate a purchaser who will offer to purchase the dealership facilities at
a reasonable price; or
2. Locate a lessee who will offer to lease the premises for a reasonable
term at a reasonable rent; or
3. Failing the foregoing, lease the dealership facilities at a reasonable
rental value for one
(1)year.
(c)If the facilities are leased by the dealer, the manufacturer will either:
1. Locate a tenant or tenants satisfactory to the lessor, who will sublet or
assume the balance of the lease; or
2. Arrange with the lessor for the cancellation of the lease without penalty
to the dealer; or
3. Failing the foregoing, lease the dealership facilities at a reasonable rent
for one
(1)year.
(d)The manufacturer shall not be obligated to provide assistance under this
section if the dealer:
1. Fails to accept a bona fide offer from a prospective purchaser, sublessee,
or assignee; or
2. Refuses to execute a settlement agreement with the lessor if the
agreement would be without cost to the dealer; or
3. Fails to make a written request for assistance under this section within
one
(1)month of the termination, cancellation, or nonrenewal.
(e)If, in an action for damages under this section, the manufacturer or distributor
fails to prove either that the manufacturer or distributor has acted in good faith
or that there was good cause for the franchise termination, cancellation, or
nonrenewal, then the manufacturer or distributor may terminate, cancel, or fail
to renew the franchise upon payment to the new motor vehicle dealer of an
amount equal to the value of the dealership as an ongoing business location.
(9)Notice of termination to a dealer shall entitle the dealer to continue the franchise and the dealer may attempt to sell the franchise until all of the dealer's appeal rights have been exhausted.