This text of Iowa § 523H.7 (Termination) is published on Counsel Stack Legal Research, covering Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
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
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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. Anassignmentforthebenefitofanycreditorpursuanttothisparagraphdoesnotinclude
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. Afterthreematerialbreachesofafranchiseagreementoccurringwithinatwelve-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.
7 FRANCHISES, §523H.12
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. Thefranchiseeoperatesthefranchisedbusinessinamannerthatimminentlyendangers
the public health and safety.