2009 Iowa Code
Title 13 - Commerce
Subtitle 1 - Insurance and Related Regulation
CHAPTER 523H - FRANCHISES
523H.7 - TERMINATION.

        523H.7  TERMINATION.
         1.  Except as otherwise provided by this chapter, a franchisor
      shall not terminate a franchise prior to the expiration of its term
      except for good cause.  For purposes of this section, "good
      cause" is cause based upon a legitimate business reason.  "Good
      cause" includes the failure of the franchisee to comply with any
      material lawful requirement of the franchise agreement, provided that
      the termination by the franchisor is not arbitrary or capricious when
      compared to the actions of the franchisor in other similar
      circumstances.  The burden of proof of showing that action of the
      franchisor is arbitrary or capricious shall rest with the franchisee.

         2.  Prior to termination of a franchise for good cause, a
      franchisor shall provide a franchisee with written notice stating the
      basis for the proposed termination.  After service of written notice,
      the franchisee shall have a reasonable period of time to cure the
      default, which in no event shall be less than thirty days or more
      than ninety days.  In the event of nonpayment of moneys due under the
      franchise agreement, the period to cure need not exceed thirty days.

         3.  Notwithstanding subsection 2, a franchisor may terminate a
      franchisee upon written notice and without an opportunity to cure if
      any of the following apply:
         a.  The franchisee or the business to which the franchise
      relates is declared bankrupt or judicially determined to be
      insolvent.
         b.  All or a substantial part of the assets of the franchise
      or the business to which the franchisee relates are assigned to or
      for the benefit of any creditor which is subject to chapter 681.  An
      assignment for the benefit of any creditor pursuant to this paragraph
      does not include the granting of a security interest in the normal
      course of business.
         c.  The franchisee voluntarily abandons the franchise by
      failing to operate the business for five consecutive business days
      during which the franchisee is required to operate the business under
      the terms of the franchise, or any shorter period after which it is
      not unreasonable under the facts and circumstances for the franchisor
      to conclude that the franchisee does not intend to continue to
      operate the franchise, unless the failure to operate is due to
      circumstances beyond the control of the franchisee.
         d.  The franchisor and franchisee agree in writing to
      terminate the franchise.
         e.  The franchisee knowingly makes any material
      misrepresentations or knowingly omits to state any material facts
      relating to the acquisition or ownership or operation of the
      franchise business.
         f.  After three material breaches of a franchise agreement
      occurring within a twelve-month period, for which the franchisee has
      been given notice and an opportunity to cure, the franchisor may
      terminate upon any subsequent material breach within the twelve-month
      period without providing an opportunity to cure, provided that the
      action is not arbitrary and capricious.
         g.  The franchised business or business premises of the
      franchisee are lawfully seized, taken over, or foreclosed by a
      government authority or official.
         h.  The franchisee is convicted of a felony or any other
      criminal misconduct which materially and adversely affects the
      operation, maintenance, or goodwill of the franchise in the relevant
      market.
         i.  The franchisee operates the franchised business in a
      manner that imminently endangers the public health and safety.  

         92 Acts, ch 1134, § 7; 95 Acts, ch 117, §4