New York State Franchise Law For New Car Dealers

HIGHLIGHTS

• Prohibits franchisors from requiring a dealer to operate dealership facilities that are exclusive to a particular line make, unless such a restriction is justified by current and reasonably expected future economic conditions in the area of the dealership. • Prohibits franchisors from requiring site control provisions that would survive or continue after the termination of a dealership if the termination is due to the discontinuation of the line-make. • Requires manufacturers acquiring a brand to honor an existing franchise agreement or to offer an agreement that is similar to the agreement that is offered to other existing franchisees. • Imposes a duty on franchisors to continue a franchise. • Provides that a franchise may not be terminated or canceled, or a renewal refused, except for “due cause”, regardless of the terms of the franchise agreement. • Defines “due cause” as a material breach by the dealer of a reasonable and necessary term of the franchise that has not been cured after notice by the franchisor. • Provides an automatic stay of any termination that a dealer protests within four (4) months. • Requires franchisors to provide at least 90 days notice of a proposed termination and, if the termination is based on sales/service performance, to provide at least 180 days for the dealer to “cure” any alleged problems. • Lists specific issues that must be considered in a dealer’s challenge to a franchise termination, including “due cause” and “good faith”. • Places the burden on a franchisor to prove that a dealer breached a material duty of the franchise. If a breach of a dealer’s duty is caused by factors beyond a dealer’s control then that breach will not be considered due cause for a termination. page 27 page 28 Enhancement of Termination Protections – 463(2)(d) Protest of Franchise Termination – 463(2)(e)

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