Equipment suppliers would face rules for ending dealer franchises

A supplier would need good cause to end a franchise and generally give the dealer written notice. These rules concern suppliers and dealers selling covered farm, construction, and outdoor power equipment and related parts. Good cause includes specified events, such as certain ownership transfers, bankruptcy, abandonment, or harm to customers or the supplier's reputation. For other good-cause reasons, the dealer would generally get 180 days' notice and 60 days to fix claimed problems. Performance-standard terminations require two years' notice. The notice and cure rules do not apply to the first seven listed reasons. The dealer must give at least 30 days' written notice to end a franchise. Supplier notice periods apply before the termination takes effect.

A supplier with authority over a proposed sale or ownership transfer would have to approve or deny it within 60 days. The rules apply when the supplier has contractual authority to approve or deny a sale or transfer of a dealer's business or ownership interest. The dealer must provide reasonable information about the people acquiring the business or ownership interest. A supplier could deny the request only if the proposed buyers fail to meet reasonable requirements it applies consistently. If a dealer dies, the estate or authorized person would have 180 days to submit a request; termination because of the death would wait until the request process or that period ends. The 60-day decision period starts when the supplier receives the dealer's written request. The estate's 180-day request period follows the dealer's death.

A dealer could seek damages from a supplier for violating the act, including lost profits and certain case costs. These provisions concern dealers and suppliers covered by the Franchise Termination Act. The dealer could also pursue other remedies allowed by law. A franchise term waiving the act, choosing another state's law, or making the dealer pay the supplier's attorney fees would be void. The act would supplement agreements that give dealers greater protection. The act would apply to continuing franchise agreements with no end date, and to other agreements entered into or renewed on or after its effective date.