RS 482 - Terminations or cancellations
A.(1) No agent, directly through an officer or an employee, may terminate, cancel, fail to renew, or substantially change the competitive circumstances of a dealership agreement or contract without good cause, or if he failed to act in good faith.
(2) An agent shall bear the burden of proof that he has acted in good faith and that there was good cause for the termination or cancellation of any dealership agreement or contract.
(3) "Good cause" shall mean failure by a dealer to substantially comply with essential and reasonable requirements imposed upon the dealer by the dealership contract or agreement, if such requirements are not different from those imposed on other dealers similarly situated, either by its terms or the manner of enforcements.
B. Good cause exists whenever:
(1) An individual proprietor, partner, or major shareholder who owns more than twenty-five percent of the control of the dealership has withdrawn from the dealership, and a replacement individual proprietor, partner, or major shareholder, who meets the qualifying criteria typically applied by the agent in approving new dealers and agrees to be bound by the terms and conditions of the manufacturer's standard dealer agreement, has not previously been identified or is not identified within a reasonable time frame.
(2) There has been a substantial reduction in interest of a substantial partner or major stockholder, and such interest is not being transferred to one or more replacement partners or major shareholders, each of whom meets the qualifying criteria typically applied by the agent in approving new dealers.
(3) The dealer has filed or had filed against it a petition in bankruptcy that has not been discharged within sixty days after the filing, has sold a substantial part of the dealer's assets related to the equipment business outside of the ordinary course of business, or has commenced dissolution or liquidation.
(4) The dealer has changed its principal place of business without prior approval of the agent, which shall not be unreasonably withheld.
(5) Except as due to force majeure, the equipment dealer has failed to operate in the normal course of business for fourteen days.
(6) The dealer has pleaded guilty to or has been convicted of a felony substantially affecting the relationship between the dealer and the agent.
(7) The dealer has engaged in conduct which is substantially injurious or detrimental to the dealer's customers or to the public.
(8) The equipment dealer has substantially defaulted under chattel mortgage or other security agreement between the dealer and the agent, or there has been a revocation or discontinuance of a guarantee of a present or future obligation to the agent.
(9)(a) After receiving at least twelve months' notice from the agent of its specific and achievable requirements for reasonable market penetration based on the performance standards that are applied uniformly to similarly situated dealers, the dealer has consistently failed to use commercially reasonable efforts to meet the agent's reasonable market penetration requirements, and the agent can demonstrate that the dealer's failure is a result of the dealer's sole efforts or lack of efforts in its markets and not a result of the agent's efforts or lack of efforts in the market.
(b) Notwithstanding the provisions of Subparagraph (a) of this Paragraph, good cause shall not exist if in the dealer's market share penetration meets or exceeds eighty percent of the agent's North American average in the twenty-four months immediately preceding the agent's attempt to terminate, cancel, fail to renew, or substantially change the competitive circumstances of a dealership agreement or contract.
C. Except as otherwise provided in this Section, an agent shall provide a dealer with at least ninety days' written notice of termination, cancellation, or nonrenewal of the dealership agreement. The notice shall state all reasons constituting good cause for the action and shall provide that the dealer has sixty days in which to cure any claimed deficiency, specifying the action that must be taken in order to cure the deficiency. If the deficiency is rectified within sixty days, the notice is void. Except as otherwise provided by law, the notice and the right to cure provisions under this Subsection are not required if the reason for termination, cancellation, or nonrenewal is a violation under the provisions of Paragraphs (B)(1) through (7) of this Section.
Acts 1991, No. 627, §1; Acts 1992, No. 372, §1; Acts 2015, No. 466, §1.