§ 2301.453 — TERMINATION OR DISCONTINUANCE OF FRANCHISE.

Texas § 2301.453

• Jurisdiction: Texas
• Code OC: Occupations Code

Text

Sec. 2301.453. TERMINATION OR DISCONTINUANCE OF FRANCHISE. (a) Notwithstanding the terms of any franchise, a manufacturer, distributor, or representative may not terminate or discontinue a franchise with a franchised dealer or directly or indirectly force or attempt to force a franchised dealer to relocate or discontinue a line-make or parts or products related to that line-make unless the manufacturer, distributor, or representative provides notice of the termination or discontinuance as required by Subsection (c) and:
(1) the manufacturer, distributor, or representative receives the dealer's informed written consent;
(2) the appropriate time for the dealer to file a protest under Subsection (e) has expired; or
(3) the board makes a determination of good cause under Subsection (g).
(b) A termination or discontinuance to which this section applies includes a termination or discontinuance of a franchise that results from a change by a manufacturer, distributor, or representative of its:
(1) distributor;
(2) method of distribution of its products in this state; or
(3) business structure or ownership.
(c) Except as provided by Subsection (d), the manufacturer, distributor, or representative must provide written notice by registered or certified mail to the dealer and the board stating the specific grounds for the termination or discontinuance. The notice must:
(1) be received not later than the 60th day before the effective date of the termination or discontinuance; and
(2) contain on its first page a conspicuous statement that reads: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE TEXAS DEPARTMENT OF MOTOR VEHICLES IN AUSTIN, TEXAS, AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR DISCONTINUANCE OF YOUR FRANCHISE UNDER THE TERMS OF CHAPTER 2301 , OCCUPATIONS CODE, IF YOU OPPOSE THIS ACTION."
(d) Notice may be provided not later than the 15th day before the effective date of termination or discontinuance if a licensed dealer fails to conduct its customary sales and service operations during its customary business hours for seven consecutive business days. This subsection does not apply if the failure is caused by:
(1) an act of God;
(2) a work stoppage or delay because of a strike or labor dispute;
(3) an order of the board; or
(4) another cause beyond the control of the dealer.
(e) A franchised dealer may file a protest with the board of the termination or discontinuance not later than the latter of:
(1) the 60th day after the date of the receipt of the notice of termination or discontinuance; or
(2) the time specified in the notice.
(f) After a timely protest is filed under Subsection (e), the board shall notify the party seeking the termination or discontinuance that:
(1) a timely protest has been filed;
(2) a hearing is required under this chapter; and
(3) the party may not terminate or discontinue the franchise until the board issues its final order or decision.
(g) After a hearing, the board shall determine whether the party seeking the termination or discontinuance has established by a preponderance of the evidence that there is good cause for the proposed termination or discontinuance.
(h) If a franchise is terminated or discontinued, the manufacturer, distributor, or representative shall establish another franchise in the same line-make within a reasonable time unless it is shown to the board by a preponderance of the evidence that the community or trade area cannot reasonably support such a dealership. If this showing is made, a license may not be issued for a franchised dealer in the same area until a change in circumstances is established.
(i) A manufacturer that changes its distributor or the method of distribution of its products in this state in a manner that results in unlawful termination or discontinuance of a franchise without good cause may not directly or indirectly distribute its products in this state.

Legislative History

Added by Acts 2001, 77th Leg., ch. 1421, Sec. 5, eff. June 1, 2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 14A.614, eff. Sept. 1, 2003. Amended by: Acts 2021, 87th Leg., R.S., Ch. 276 (H.B. 3514 ), Sec. 3, eff. September 1, 2021.