Termination Of Franchises
The bill significantly impacts state laws concerning franchise agreements, establishing a clearer framework that governs the relationships between dealers and suppliers. It stipulates that suppliers must prove 'good cause' for any termination, thereby shifting some of the burden of proof to them and enhancing the protection for dealers. Additionally, the amendment to the act allows for dealers to pursue legal recourse for damages incurred due to violations of the Act, including claims for attorney's fees and costs associated with any legal action taken against the supplier.
House Bill 398 amends the Franchise Termination Act in New Mexico, focusing on enhancing protections for dealers involved in franchise agreements with suppliers. The bill introduces new requirements for suppliers to provide adequate notice before terminating a franchise. Under the new law, a dealer must receive at least 180 days of prior written notice stating the reasons for termination and giving them a chance to cure any deficiencies within 60 days. This provision aims to ensure that dealers are not abruptly terminated without a fair opportunity to address any issues.
While proponents argue that the bill strengthens the rights of dealers and creates a more equitable playing field, there are concerns among suppliers that the added regulations will impose undue burdens on their operations. Suppliers may view these changes as limiting their ability to make rapid decisions regarding their franchises. Additionally, the requirement to provide extended notice and the establishment of a burden of proof for terminations could create a more complex regulatory environment that some suppliers may find challenging to navigate.