§ 42-133f — Termination, or cancellation of, or failure to renew a franchise.

Connecticut § 42-133f

• Jurisdiction: Connecticut
• Title 42: Business, Selling, Trading and Collection Practices
• Ch. 739: Trading Stamps, Mail Orders, Franchises, Credit Programs and Subscriptions

Text

(a) No franchisor shall, directly, or through any officer, agent or employee, terminate, cancel or fail to renew a franchise, except for good cause which shall include, but not be limited to the franchisee's refusal or failure to comply substantially with any material and reasonable obligation of the franchise agreement or for the reasons stated in subsection (e) of this section. The franchisor shall give the franchisee written notice of such termination, cancellation or intent not to renew, at least sixty days in advance to such termination, cancellation or failure to renew with the cause stated thereon; provided, in the event the franchisor elects not to renew a franchise pursuant to subsection (e) of this section, the franchisor shall give the franchisee written notice of such intent not to renew at least six months prior to the expiration of the current franchise agreement. The provisions of this section shall not apply (1) where the alleged grounds are voluntary abandonment by the franchisee of the franchise relationship, in which event, such notice may be given thirty days in advance of such termination, cancellation or failure to renew, or (2) where the alleged grounds are the conviction of the franchisee in a court of competent jurisdiction of an offense punishable by a term of imprisonment in excess of one year and directly related to the business conducted pursuant to the franchise, in which event, such notice may be given at any time following such conviction and shall be effective upon delivery and written receipt of such notice. (b) If the franchise which is the subject of a notice of termination, cancellation or failure to renew provided for in subsection (a) of this section is operated on premises leased by the franchisor to the franchisee under a lease which terminates upon termination of the franchise, and if the franchisor seeks to terminate the lease, the notice shall be served upon the franchisee by a state marshal or indifferent person and shall expressly state that said lease shall terminate upon termination of the franchise, and shall further state that the franchisee may have certain rights under sections 42-133f and 42-133g , which sections shall be reproduced and attached to the notice. (c) Upon termination of any franchise the franchisee shall be allowed fair and reasonable compensation by the franchisor for the franchisee's inventory, supplies, equipment and furnishings purchased by the franchisee from the franchisor or its approved sources under the terms of the franchise or any ancillary or collateral agreement; provided no compensation shall be allowed for personalized items which have no value to the franchisor. (d) Notwithstanding the provisions of section 52-550 , no franchise entered into or renewed on or after October 1, 1973, whether oral or written, shall be for a term of less than three years and for successive terms of not less than three years thereafter unless cancelled, terminated or not renewed pursuant to subsections (a) and (d) of this section. (e) A franchisor may elect not to renew a franchise which involves the lease by the franchisor to the franchisee of real property and improvement, in the event the franchisor (1) sells or leases such real property and improvements to other than a subsidiary or affiliate of the franchisor for any use; or (2) sells or leases such real property to a subsidiary or affiliate of the franchisor, except such subsidiary or affiliate shall not use such real property for the operation of the same business of the franchisee; or (3) converts such real property and improvements to a use not covered by the franchise agreement; or (4) has leased such real property from a person not the franchisee and such lease from such person is terminated or not renewed. (f) Any waiver of the rights of a franchisee under sections 42-133f or 42-133g which is contained in any franchise agreement entered into or amended on or after June 12, 1975, shall be void. See Sec. 42-133h re applicability of section.

Legislative History

(1972, P.A. 287, S. 2; P.A. 73-500, S. 2; P.A. 74-292, S. 1, 3; P.A. 75-360, S. 1, 2; P.A. 85-493, S. 1; P.A. 86-238, S. 1; P.A. 00-99, S. 84, 154.) History: P.A. 73-500 specified that termination, cancellation or failure to renew of franchise must be “for good cause”, required that notice contain statement of cause and that copy be filed with consumer protection commissioner in Subsec. (a), changing wording slightly, and added Subsecs. (c) and (d) re term of franchise and arbitration of question of “good cause”; P.A. 74-292 specifically included franchisee's noncompliance with obligations of franchise agreement and nonrenewal as in Subsec. (d) (see below) as “good cause”, added proviso in notice requirement and deleted requirement that copy be sent to commissioner in Subsec. (a), made Subsec. (c) provisions applicable to renewals and replaced former Subsec. (d) provisions re arbitration with new provisions setting forth conditions for nonrenewal involving lease of real property; P.A. 75-360 added Subsec. (e); P.A. 85-493 eliminated a provision requiring a franchisor to compensate a franchisee for costs and expenses paid to the franchisor upon the termination of a franchise; P.A. 86-238 amended Subsec. (a) by allowing termination or cancellation with 30 days' notice instead of 15 days' in the case of voluntary abandonment of a franchise, and inserted a new Subsec. (b) which provided notice requirements for termination of a franchise which terminates upon the termination of a lease, relettering previously existing Subsecs. as necessary; P.A. 00-99 replaced reference to sheriff with state marshal in Subsec. (b), effective December 1, 2000. Cited. 179 C. 471; 180 C. 720. Cited. 1 CA 439. Cited. 38 CS 495. Subsec. (a): In order to prove “good cause” under section, franchisor has to show that franchisee either failed to or refused to comply substantially with a material and reasonable term of the franchise agreement, or that franchisor had an equivalent business reason of a similar nature. 250 C. 334.