§ 4089 — Termination; cancellation or nonrenewal

(a) Notwithstanding the terms, provisions, or conditions of any franchise or notwithstanding the terms or provisions of any waiver, no manufacturer shall cancel, terminate, or fail to renew any franchise with a licensed new motor vehicle dealer unless:
(1) the manufacturer:
(A) has satisfied the notice requirement of section 4090 of this title;
(B) has good cause for cancellation, termination, or nonrenewal; and
(C) has acted in good faith as defined in this chapter; and
(2)(A) the Transportation Board finds after a hearing that the manufacturer has acted in good faith and there is good cause for cancellation, termination, failure to renew, or refusal to continue any franchise relationship, consistent with the following:
(i) the new motor vehicle dealer may file a protest with the Board within 45 days after receiving the 90-day notice;
(ii) a copy of the protest shall be served by the new motor vehicle dealer on the manufacturer;
(iii) when a protest is filed to challenge the cancellation, termination, or nonrenewal of a franchise agreement under this section, such franchise agreement shall remain in full force and effect, and such franchisee shall retain all rights and remedies pursuant to the terms and conditions of such franchise agreement, including the right to sell or transfer such franchisee’s ownership interest until a final determination by the Board and any appeal;
(B) the manufacturer, distributor, or branch or division thereof has received the written consent of the new motor vehicle dealer; or
(C) the appropriate period for filing a protest has expired.
(b) For purposes of this chapter, good cause for terminating, canceling, or failing to renew a franchise shall be limited to failure by the franchisee to substantially comply with those requirements imposed upon the franchisee by the franchise as set forth in subdivision (c)(1) of this section.
(c) Notwithstanding the terms, provisions, or conditions of any agreement or franchise or the terms or provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation, or nonrenewal when:
(1) there is a failure by the new motor vehicle dealer to comply with a provision of the franchise which provision is both reasonable and of material significance to the franchise relationship, provided that compliance on the part of the new motor vehicle dealer is reasonably possible; or if the failure by the new motor vehicle dealer to comply with a provision of the franchise is pursuant to a notice issued under subdivision 4090(a)(2)(A) of this title; and the manufacturer, distributor, or branch or division thereof first acquired actual or constructive knowledge of such failure not more than 180 days prior to the date on which notification is given pursuant to section 4090 of this title;
(2) if the failure by the new motor vehicle dealer, defined in subdivision (1) of this subsection, relates to the performance of the new motor vehicle dealer in sales or service, then good cause shall be defined as the failure of the new motor vehicle dealer to comply with reasonable performance criteria established by the manufacturer if the new motor vehicle dealer was apprised by the manufacturer in writing of such failure; and
(A) the notification stated that notice was provided for failure of performance pursuant to this section;
(B) the new motor vehicle dealer was afforded a reasonable opportunity, for a period of not less than six months, to comply with such criteria;
(C) the new motor vehicle dealer did not demonstrate substantial progress towards compliance with the manufacturer’s performance criteria during such period and the new motor vehicle dealer’s failure was not primarily due to economic or market factors within the dealer’s relevant market area beyond the dealer’s control; and
(D) the performance criteria established by the manufacturer are fair, reasonable, and equitable as applied to all same line-make franchisees of the manufacturer in the State.
(d) The manufacturer shall have the burden of proof under this section for showing that it has acted in good faith, that all notice requirements have been satisfied, and that there was good cause for the franchise termination, cancellation, nonrenewal, or noncontinuance.
(e) Notwithstanding the terms, provisions, or conditions of any agreement or franchise, or the terms or provisions of any waiver, the following do not constitute good cause for the termination, cancellation, nonrenewal, or noncontinuance of a franchise:
(1) The change of ownership of the new motor vehicle dealer’s dealership, excluding any change in ownership that would have the effect of the sale of the franchise without the reasonable consent of the manufacturer, distributor, or branch or division thereof.
(2) The fact that the new motor vehicle dealer refused to purchase or accept delivery of any new motor vehicle parts, accessories, or any other commodity or services not ordered by the new motor vehicle dealer.
(3) The fact that the new motor vehicle dealer owns, has an investment in, participates in the management of, or holds a license for the sale of another line-make of new motor vehicle, or that the new motor vehicle dealer has established another line-make of new motor vehicle in the same dealership facilities as those of the manufacturer, distributor, or branch or division thereof, provided that the new motor vehicle dealer maintains a reasonable line of credit for each line-make of new motor vehicle and that the new motor vehicle dealer remains in substantial compliance with any reasonable facilities requirements of the manufacturer, distributor, or branch or division thereof.
(4) The fact that the new motor vehicle dealer sells or transfers ownership of the dealership or sells or transfers capital stock in the dealership to the new motor vehicle dealer’s spouse, son, or daughter. The manufacturer, distributor, or branch or division thereof shall give effect to such change in ownership unless the transfer of the new motor vehicle dealer’s license is denied or the new owner is unable to license, as the case may be. (Added 1981, No. 157 (Adj. Sess.), § 1, eff. April 14, 1982; amended 2009, No. 57, § 1, eff. June 1, 2009; 2021, No. 20, § 36.)