2018 Connecticut General Statutes
Title 42 - Business, Selling, Trading and Collection Practices
Chapter 739 - Trading Stamps, Mail Orders, Franchises, Credit Programs and Subscriptions
Section 42-133v - Cancellation, termination or nonrenewal of franchise. “Good cause” requirement. Notice. Appeal.
(a) Notwithstanding the terms, provisions or conditions of any franchise agreement and notwithstanding the terms or provisions of any waiver or other agreement between the manufacturer or distributor and the dealer, no manufacturer or distributor shall cancel, terminate or fail to renew any franchise with a licensed dealer unless the manufacturer or distributor has satisfied the notice requirement of subsection (d) of this section, has good cause for cancellation, termination or nonrenewal and has acted in good faith.
(b) Notwithstanding the terms, provisions or conditions of any franchise or the terms or provisions of any waiver or other agreement between the manufacturer or distributor and the dealer, good cause exists for the purposes of a termination, cancellation or nonrenewal if:
(1) There is a failure by the dealer to comply with a provision of the franchise which is both reasonable and of material significance to the franchise relationship, provided that the dealer has been notified in writing of the failure not later than one hundred eighty days after the manufacturer or distributor first acquired knowledge of such failure;
(2) If the failure by the dealer, defined in subdivision (1) of this subsection, relates to the performance of the dealer in sales or service, then good cause shall be defined as the failure of the dealer to comply with reasonable performance criteria established by the manufacturer or distributor if the dealer was apprised by the manufacturer or distributor in writing of such failure; and: (A) The notification stated that notice was provided of failure of performance under this section; (B) the dealer was afforded a reasonable opportunity, for a period of not less than six months, to comply with such criteria; and (C) the dealer did not demonstrate substantial progress towards compliance with the manufacturer's or distributor's performance criteria during such period.
(c) The manufacturer or distributor shall have the burden of proof under this section.
(d) Notwithstanding the terms, provisions or conditions of any franchise or other agreement between the manufacturer or distributor and the dealer, prior to the termination, cancellation or nonrenewal of any franchise, the manufacturer or distributor shall furnish notification of such termination, cancellation or nonrenewal to the dealer as follows: (1) In the manner described in subsection (e) of this section; and (2) not less than ninety days prior to the effective date of such termination, cancellation or nonrenewal; or (3) not less than fifteen days prior to the effective date of such termination, cancellation or nonrenewal with respect to: (A) Insolvency of the dealer, or filing of any petition by or against the dealer under any bankruptcy or receivership law; (B) failure of the dealer to conduct customary sales and service operations during business hours for seven consecutive business days, except in circumstances beyond the direct control of the dealer; (C) conviction of the dealer, or any owner thereof, of any felony which is punishable by imprisonment; (D) suspension or revocation of any license which the new motor vehicle dealer is required to have to operate a dealership; or (E) a fraudulent misrepresentation by the dealer to the manufacturer or distributor which is material to the franchise; (4) not less than one hundred eighty days prior to the effective date of such termination or cancellation if the manufacturer or distributor is discontinuing the sale of the product line.
(e) Notice under this section shall be in writing, sent by certified mail or personally delivered to the dealer; and shall contain: (1) A statement of intention to terminate, cancel or not to renew the franchise; (2) a statement of the reasons for the termination, cancellation or nonrenewal; and (3) the date on which such termination, cancellation or nonrenewal takes effect.
(f) No manufacturer or distributor shall terminate, cancel or fail to renew a dealer's franchise for the failure or refusal of the dealer to do any of the following: (1) Failure to meet sales quotas suggested by the manufacturer or distributor; (2) refusal to sell any product at a price suggested by the manufacturer or distributor; (3) refusal to keep the premises open and operating during those hours which are documented by the dealer to be unprofitable to the dealer or to preclude the dealer from establishing his own hours of operation beyond the hour of 10:00 p.m. and prior to 6:00 a.m.; (4) refusal to meet unreasonable minimum standards and marketing guides, which include, but are not limited to, capital, inventory, facility and personnel requirements; (5) refusal to give the manufacturer or distributor financial records of the operation of the franchise which are not related or necessary to the dealer's obligations under the franchise agreement. Subdivisions (1) to (5), inclusive, of this subsection shall not be deemed good cause under subsection (b) of this section.
(g) If a franchisee brings an action in a court of competent jurisdiction to challenge the cancellation, termination or nonrenewal of a franchise agreement by a manufacturer or distributor under this section, such franchise agreement shall remain in full force and effect and such franchisee shall retain all rights and remedies pursuant to the terms and conditions of such franchise agreement, including, but not limited to, the right to sell or transfer such franchisee's ownership interest, until a final determination by the court of competent jurisdiction and any appeal from such determination, unless extended by the court of competent jurisdiction for good cause. This subsection shall not apply to a cancellation, termination or nonrenewal of a franchise agreement based upon any of the reasons set forth in subdivision (3) of subsection (d) of this section.
(P.A. 82-445, S. 5, 15; P.A. 83-198, S. 5, 11; 83-304, S. 1, 2; P.A. 99-132; P.A. 09-50, S. 2.)
History: P.A. 83-198 subjected distributors to the provisions of this section; P.A. 83-304 added Subsec. (f) limiting manufacturer's or distributor's ability to cancel, terminate or fail to remove a dealer's franchise; P.A. 99-132 added Subsec. (g) re appeal of a cancellation, termination or nonrenewal of a franchise agreement; P.A. 09-50 amended Subsecs. (a), (b) and (d) to extend applicability of provisions re waiver and franchise to any “other agreement between the manufacturer or distributor and the dealer”, amended Subsec. (g) to change time period of agreement's full force and effect following initiation of court action from 6 months following final determination by court to until final determination and any appeal from such determination, and made technical changes in Subsecs. (b)(1), (d) and (f), effective May 8, 2009.
