§ 199-I — Dealers' rights to transfer, assign or dispose of the franchise upon notice to distributor

New York § 199-I

• Jurisdiction: New York
• Law GBS: General Business
• Art. 11-B: Franchises For the Sale of Motor Fuels

Text

§ 199-i. Dealers' rights to transfer, assign or dispose of the\nfranchise upon notice to distributor. 1. Every franchise agreement and\nany other lease or agreement in connection therewith between a\ndistributor and a dealer shall be transferable or assignable at the\noption of the dealer provided the distributor consents to such\nassignment, which consent shall not be unreasonably withheld. A proposed\nassignee shall meet the reasonable standards normally required by the\ndistributor or its prospective dealers, including, but not limited to:\n(a) experience and qualifications; (b) credit rating; (c) financial\nresources; (d) moral character; and (e) operation by the assignee of not\nmore than two dealerships with the distributor from whom consent is\nrequested. Prior to any transfer or assignment, the dealer shall notify\nthe distributor of an intention to transfer or assign such franchise by\nwritten notice of intent setting forth the prospective assignee's name,\naddress, statement of financial qualification and business experience\nduring the previous five years. The distributor shall, within sixty days\nafter receipt of such notice of intent, give written notice to the\ndealer of its consent or objection to such transfer or assignment. If\nthe distributor objects to the transfer or assignment, it shall state\nits reasons therefor. If the distributor does not reply within the\nspecified sixty days, approval of the transfer or assignment shall be\ndeemed granted. Such transfer or assignment shall not be valid until\nthe assignee agrees in writing to comply with all the requirements of\nthe franchise and any other lease or agreement in connection therewith\nthen in effect.\n A dealer may not exercise the right of assignment or transfer after he\nhas been notified of termination or non-renewal of the franchise\nagreement for cause as described in the federal petroleum marketing\npractices act unless the notice of intent to assign or transfer under\nthis section has been delivered to the distributor prior to the dealer's\nreceipt of such notice of termination or non-renewal.\n 2. (a) Upon the death of the dealer, the franchise and any lease or\nother agreement in connection therewith shall devolve to the designated\nsuccessor of such dealer, provided that prior to his death, the dealer\nhas notified the distributor in writing of the name, address and\nrelationship of the designated successor and the designated successor\nmeets the qualifications specified in subdivision one of this section at\nthe time of the dealer's death. For the purpose of this subdivision, the\nterm "designated successor" shall include one or more of the following\npersons: (i) the surviving spouse; (ii) the adult child or children of\nthe deceased dealer; and (iii) any adult next-of-kin of the deceased\ndealer who has actively participated in the dealership for at least\ntwelve months preceding the dealer's death. The twelve month period need\nnot be continuous.\n Upon the death of the dealer, the designated successor shall promptly\nassume operation of the franchise and shall be responsible for the\noperation of the franchise in accordance with the terms and conditions\nof the deceased dealer's franchise, pending acceptance by the\ndistributor of the designated successor. The distributor may assist the\ndesignated successor with the operation of the station in a supervisory\ncapacity at its own expense. Within twenty days after the dealer's\ndeath, the designated successor shall give written notice to the\ndistributor of his or her election to assume and operate the franchise,\nwhich shall include the information required in subdivision one of this\nsection, and shall also notify the distributor concerning what\narrangements have been made for the operation of the franchise pending\nthe acceptance or rejection of the designated successor. Within forty\ndays after such notification, the distributor shall give written notice\nto the designated successor of its approval or disapproval of the\ndesignated successor. If the distributor does not approve the designated\nsuccessor, it shall state its reasons therefor. If the distributor does\nnot reply within the specified forty day period, approval of the\ndesignated successor shall be deemed granted.\n (b) In the event that the distributor has timely objected to the\ndesignated successor, the personal representative or next-of-kin of the\ndeceased dealer may, within sixty days from receipt by the designated\nsuccessor of the notice of disapproval, elect to transfer or assign the\nfranchise in accordance with the provisions of subdivision one of this\nsection. Such an election shall be made by giving written notice to the\ndistributor of the election within twenty days after the receipt by the\ndesignated successor of the notice of disapproval. Written notice shall\nbe given to the distributor of the intention to transfer or assign the\nfranchise in accordance with the provisions of subdivision one of this\nsection prior to the expiration of such sixty day period. Pending such\na transfer or assignment, the distributor may assume full operation of\nthe franchise for its own account, in which event it shall account to\nthe personal representative of the deceased dealer for any inventory,\nassets and personal property of any kind on the premises at the time the\ndistributor accepts possession of the franchise.\n (c) In the event that the deceased dealer has not designated a\nsuccessor or the designated successor has not elected to assume and\noperate the franchise, the personal representative or next-of-kin of the\ndeceased dealer may, within one hundred twenty days after the dealer's\ndeath, elect to transfer the franchise in accordance with the provisions\nof subdivision one of this section. Such an election shall be made by\ngiving written notice to the distributor of such an election within\ntwenty days after the dealer's death. Written notice shall be given to\nthe distributor of the intention to transfer or assign the franchise in\naccordance with the provisions of subdivision one of this section prior\nto the expiration of such one hundred twenty day period. Within twenty\ndays after the dealer's death, the personal representative or\nnext-of-kin shall also give written notice to the distributor concerning\nwhat arrangements have been made for the operation of the franchise\npending the transfer or assignment. Pending such a transfer or\nassignment, the distributor may elect to assume full operation of the\nfranchise for its own account, in which event it shall account to the\npersonal representative of the deceased dealer for any inventory, assets\nand personal property of any kind on the premises at the time the\ndistributor accepts possession of the franchise.\n (d) No franchise by succession or assignment pursuant to this section\nshall be valid unless and until the designated successor or assignee\nagrees in writing to comply with all of the requirements of the\nfranchise and any other lease or agreement in connection therewith then\nin effect.\n 3. This section shall not apply to any franchise until the dealer has\noperated the service station pursuant to a franchise agreement with the\ndistributor for a continuous three year period, which period shall\ninclude the term of any franchise in effect prior to or on the effective\ndate of this section and the term of any franchise transferred to a\ndesignated successor pursuant to paragraph (a) of subdivision two\nhereof.\n 4. Notice of transfer or assignment and notice of objections stating\nthe reasons therefor may be transmitted by any method of personal\nservice established under article three of the civil practice law and\nrules, or by mailing same by certified or registered mail to the party\nto be notified at their actual place of business. Notice by mailing\nshall be deemed made when deposited in a post office or official\ndepository of the United States postal service.\n 5. Upon receipt of the written notice of objection with reasons\ntherefor, as provided in subdivisions one and two of this section, a\ndealer, designated successor or the personal representative or\nnext-of-kin of the deceased dealer may bring an action against a\ndistributor in any court of competent jurisdiction for wrongfully\nimpeding the transfer or assignment of a franchise, provided that any\nsuch action must be commenced within one year following receipt of such\nnotice of objection. The court, upon finding that the stated reasons for\nobjection are arbitrary, capricious or unreasonable, may award money\ndamages and grant such equitable relief as it deems proper.\n 6. In the event that any of the time periods referred to herein are\nnot met by a dealer, assignee, designated successor, personal\nrepresentative or next-of-kin, the franchise shall terminate.\n