The bill introduces more stringent rules governing the relationship between suppliers and dealers. It clarifies definitions relevant to franchise agreements, such as what constitutes a 'dealer' and what 'good cause' can be invoked for termination. By requiring suppliers to give a defined notice period and enabling dealers to dispute terminations, the bill aims to promote fair business practices and prevent sudden disruptions to dealer operations. This legislative change may significantly influence how suppliers design their franchise agreements moving forward.
Summary
Senate Bill 313 aims to amend the Franchise Termination Act by enhancing protections for dealers against the arbitrary termination of franchises by suppliers. It stipulates that a supplier must provide at least 180 days' notice before terminating a franchise, accompanied by the reasons constituting good cause for the termination. Additionally, if the dealer remedies any deficiencies within this notice period, the termination notice becomes void. This amendment supports dealers in maintaining their businesses and ensures they have adequate time to address performance issues.
Contention
Some concerns arising from the bill include potential pushback from suppliers who might see these requirements as restrictive. Suppliers may argue that the need to provide a lengthy notice period and the opportunity for dealers to rectify claimed deficiencies could hinder their operational flexibility. Additionally, suppliers might resist provisions that make certain terms within the franchise agreement void, including those related to attorney fees. As such, a balance must be struck between protecting dealers and maintaining fair business practices within the industry.
Relating to dealer agreements regarding the purchase and sale of certain equipment or machinery used for agricultural, construction, industrial, mining, outdoor power, forestry, and landscaping purposes.