§ 8-21C-4 — Manufacturer and Dealer Agreement - Termination, Cancellation, Etc

(a) A manufacturer or distributor, directly or through any authorized officer, agent, or employee, may terminate, cancel, or fail to renew a manufacturer and dealer agreement with or without cause. If the manufacturer or distributor terminates, cancels, or fails to renew a manufacturer and dealer agreement without cause, the manufacturer or distributor shall comply with Section 8-21C-5. If the manufacturer or distributor terminates, cancels, or fails to renew a manufacturer and dealer agreement with cause, Section 8-21C-5 does not apply.
(b) A manufacturer or distributor has the burden of showing cause for terminating, canceling, or failing to renew a manufacturer and dealer agreement with a dealer. For purposes of determining whether there is cause for the proposed action, any of the following factors may be considered:
(1) The extent of the affected dealer’s penetration in the area of sales responsibility.
(2) The nature and extent of the dealer’s investment in its business.
(3) The adequacy of the dealer’s service facilities, equipment, parts, supplies, and personnel.
(4) The effect of the proposed action on the community.
(5) The extent and quality of the dealer’s service under recreational vehicle warranties.
(6) The failure to follow agreed upon procedures or standards related to the overall operation of the dealership.
(7) The dealer’s performance under the terms of the manufacturer and dealer agreement.
(c) In the event the manufacturer or distributor is terminating the agreement for cause and except as otherwise provided in this section, a manufacturer or distributor shall provide the dealer, at least 120 days prior, with a written notice of termination, cancellation, or nonrenewal of the manufacturer and dealer agreement for cause.
(d)(1) A manufacturer or distributor that terminates a dealer agreement pursuant to subsection (c) shall provide a notice stating all reasons for the proposed termination, cancellation, or nonrenewal. The notice shall further state that if, within 30 days following receipt of the notice, the dealer provides to the manufacturer or distributor a written notice of intent to cure all claimed deficiencies, the dealer shall then have 120 days following receipt of the notice to rectify the deficiencies. If the deficiencies are rectified within 120 days, the manufacturer’s or distributor’s notice is void. If the dealer fails to provide the notice of intent to cure the deficiencies in the prescribed time period, the termination, cancellation, or nonrenewal takes effect 30 days after the receipt by the dealer of the notice unless the dealer has new and untitled inventory on hand. The dealer may dispose of the inventory pursuant to Section 8-21C-5.
(2) The notice period for a termination for cause may be reduced to 30 days if the grounds of the manufacturer or distributor for termination, cancellation, or nonrenewal are due to any of the following factors:
a. A dealer or any of its owners is convicted of, or enters a plea of nolo contendere to, a felony.
b. The dealer abandons or closes the business operations of the dealer for 10 consecutive business days unless the closing is due to a natural disaster, fire, labor difficulty, act of terrorism, war, riot, or other cause over which the dealer has no control.
c. A significant misrepresentation by the dealer materially affecting the business relationship.
d. A suspension or revocation of any license the dealer is required to possess, or a refusal by a licensing authority to renew a required license.
e. A material violation of this chapter which is not cured within 30 days after the written notice by the manufacturer or distributor.
(e) The notice provisions of subsections (c) and (d) do not apply if the reason for termination, cancellation, or nonrenewal is the insolvency of the dealer or the occurrence of an assignment for the benefit of creditors or bankruptcy.
(f)(1) A dealer may terminate or cancel its manufacturer and dealer agreement with a manufacturer or distributor with or without cause by giving 30 days written notice. If the termination or cancellation is for cause, the notice shall state all reasons for the proposed termination or cancellation and shall further state that if, within 30 days following receipt of the notice, the manufacturer or distributor provides to the dealer a written notice of intent to cure all claimed deficiencies, the manufacturer or distributor will then have 120 days following receipt of the original notice to rectify the deficiencies. If the deficiencies are rectified within 120 days, the dealer’s notice is void. If the manufacturer or distributor fails to provide the notice of intent to cure the deficiencies in the time period prescribed in the original notice of termination or cancellation, the pending termination or cancellation shall take effect 30 days after the receipt by the manufacturer or distributor of the original notice.
(2) If the dealer terminates, cancels, or fails to renew the manufacturer and dealer agreement without good cause, the terms of Section 8-21C-5 do not apply. If the dealer terminates, cancels, or fails to renew the manufacturer and dealer agreement for good cause, Section 8-21C-5 applies. The dealer has the burden of showing cause. Any of the following shall be deemed cause for the proposed termination, cancellation, or nonrenewal action by a dealer:
a. The manufacturer or distributor being convicted of, or entering a plea of nolo contendere to, a felony.
b. The business operations of the manufacturer or distributor have been abandoned or closed for 10 consecutive business days, unless the closing is due to a natural disaster, fire, labor difficulty, act of terrorism, war, riot, or other cause over which the manufacturer or distributor has no control.
c. A significant misrepresentation by the manufacturer or distributor materially affecting the business relationship.
d. A material violation of this chapter which is not cured within 30 days after written notice by the dealer.
(3) The notice provisions of subdivisions (1) and (2) do not apply if the reason for termination, cancellation, or nonrenewal is the insolvency of the manufacturer or distributor or the occurrence of an assignment for the benefit of creditors or bankruptcy.

Legislative History

(Act 2011-636, p. 1529, §4.)