§ 4072 — Termination of dealer agreement

(a) Requirements for notice.
(1) A person shall provide a notice required in this section by certified mail or by personal delivery.
(2) A notice shall be in writing and shall include:
(A) a statement of intent to terminate the dealer agreement;
(B) a statement of the reasons for the termination, including specific reference to one or more requirements of the dealer agreement that serve as the basis for termination, if applicable; and
(C) the effective date of termination.
(b) Termination by a supplier for cause.
(1) In this subsection, “cause” means the failure of a dealer to meet one or more requirements of a dealer agreement, provided that the requirement is reasonable, justifiable, and substantially the same as requirements imposed on similarly situated dealers in this State.
(2) A supplier shall not terminate a dealer agreement except for cause.
(3) To terminate a dealer agreement for cause, a supplier shall deliver a notice of termination to the dealer at least 120 days before the effective date of termination.
(4) A dealer has 60 days from the date it receives a notice of termination to meet the requirements of the dealer agreement specified in the notice.
(5) If a dealer meets the requirements of the dealer agreement specified in the notice within the 60-day period, the dealer agreement does not terminate pursuant to the notice of termination.
(c) Termination by a supplier for failure to meet reasonable marketing or market penetration requirements.
(1) Notwithstanding subsection (b) of this section, a supplier shall not terminate a dealer agreement for failure to meet reasonable marketing or market penetration requirements except as provided in this subsection.
(2) A supplier shall deliver an initial notice of termination to the dealer at least 24 months before the effective date of termination.
(3) After providing an initial notice, the supplier shall work with the dealer in good faith to meet the reasonable marketing or market penetration requirements specified in the notice, including reasonable efforts to provide the dealer with adequate inventory and marketing programs that are substantially the same as those provided to dealers in this State or region, whichever is more appropriate under the circumstances.
(4) If the dealer fails to meet reasonable marketing or market penetration requirements specified in the notice by the end of the 24-month period, the supplier may terminate the dealer agreement by providing a final notice of termination not less than 90 days prior to the effective date of the termination.
(5) If a dealer meets the reasonable marketing or market penetration requirements within the 24-month period, the dealer agreement shall not terminate.
(d) Termination by a supplier upon a specified event. Notwithstanding subsection (b) of this section, a supplier may terminate immediately a dealer agreement if one of the following events occurs:
(1) A person files a petition for bankruptcy or for receivership on behalf of or against the dealer.
(2) The dealer makes an intentional and material misrepresentation regarding his or her financial status.
(3) The dealer defaults on a chattel mortgage or other security agreement between the dealer and the supplier.
(4) A person commences the voluntary or involuntary dissolution or liquidation of a dealer organized as a business entity.
(5) Without the prior written consent of the supplier:
(A) The dealer changes the business location specified in the dealer agreement or adds an additional dealership of the supplier’s same brand.
(B) An individual proprietor, partner, or major shareholder withdraws from, or substantially reduces his or her interest in, the dealer.
(6) The dealer fails to operate in the normal course of business for eight consecutive business days, unless the failure to operate is caused by an emergency or other circumstances beyond the dealer’s control.
(7) The dealer abandons the business.
(8) The dealer pleads guilty to or is convicted of a felony that is substantially related to the qualifications, function, or duties of the dealer.
(e) Termination by a dealer. Unless a provision of a dealer agreement provides otherwise, a dealer may terminate the dealer agreement by providing a notice of termination to the supplier at least 120 days before the effective date of termination. (Added 1993, No. 113 (Adj. Sess.), § 1, eff. March 4, 1994; amended 2015, No. 142 (Adj. Sess.), § 2.)