§ 35-38-104 — Dealer agreement cancellation notice - definition

(1) (a) Unless
one or more of the provisions found in subparagraphs (I) to (X) of paragraph (b) of
subsection (2) of this section apply, a supplier shall give an equipment dealer one
hundred eighty days written notice of the supplier's intent to terminate, cancel, or
not renew a dealer agreement or to change the competitive circumstances of such
agreement.

(b) (I) Notice sent pursuant to paragraph (a) of this subsection (1) shall state
the reasons for termination, cancellation, or nonrenewal and state that the dealer
has one hundred eighty days in which to cure any claimed deficiency.

(II) If the dealer cures the deficiency to the supplier's satisfaction within the
one-hundred-eighty-day period, the supplier may not terminate, cancel, refuse to
renew, or change the competitive circumstances of the agreement for the reasons
specified in the notice. The terms of the agreement shall not expire and the supplier
shall not change the competitive circumstances of the agreement before the end of
the one-hundred-eighty-day period without the dealer's written consent.

(2) (a) A supplier, either directly or through an agent, shall not terminate,
cancel, fail to renew, or substantially change the competitive circumstances of a
dealership agreement without cause.

(b) As used in this subsection (2), cause means when a dealer:

(I) Fails to comply with the terms of the agreement if these requirements are
not different from those imposed on other similarly situated dealers in this state;

(II) Transfers a controlling ownership interest in the dealership without the
supplier's consent; except that the supplier shall not withhold consent without
good reason;

(III) Makes a material misrepresentation or falsification of a record;

(IV) Files a voluntary petition in bankruptcy or has an involuntary petition in
bankruptcy filed against the dealer that has not been discharged within the sixty-day period after it was filed;

(V) Is insolvent or in receivership;

(VI) Pleads guilty to or is convicted of a felony;

(VII) Fails to operate in the normal course of business for seven consecutive
business days or terminates the business;

(VIII) Relocates or establishes a new or additional equipment dealer's place
of business, representing the same supplier, without the supplier's consent;

(IX) Fails to satisfy a payment obligation as it comes due and payable to the
supplier;

(X) Fails to promptly account to the supplier for any proceeds from the sale
of equipment or to hold such proceeds in trust for the supplier's benefit;

(XI) Consistently engages in business practices that are detrimental to the
consumer or the supplier, including use of excessive pricing or misleading
advertising or failing to provide service and replacement parts or perform warranty
obligations;

(XII) Consistently fails to meet the suppliers market penetration
requirements based on available record information and after receiving notice from
the supplier of the supplier's requirements;

(XIII) Consistently fails to meet building and housekeeping requirements;

(XIV) Consistently fails to provide adequate sales, service, or parts personnel
commensurate with the dealer agreement;

(XV) Consistently fails to comply with the applicable licensing laws
pertaining to the products and services the dealer represents for and on the
supplier's behalf.

Legislative History

Source: L. 95: Entire article R&RE, p. 366, � 1, effective July 1. L. 2025: IP(2)(b) and (2)(b)(IV) amended, (HB 25-1084), ch. 24, p. 123, � 100, effective August 6.