UTGB Vol 5.pdf - Robson Hall Faculty of Law

114 Underneath the Golden Boy
grounds. Furthermore, Monnin J. found that the termination clause in the
dealer agreement must have "reasonableness" read into it. In Halligan v. Liberty
Tax Service Inc./os the Court found that the franchisor's attempt to terminate
the contract was malicious and, thus, a breach of the duty of good faith.
Overall, Manitoba's common law forces a franchisor to give reasonable notice
upon termination, to have reasonable grounds to do so and to act in good faith.
Although Manitoba's Court of Queen's Bench has established certain
requirements upon termination, several questions that arise upon termination
remain unanswered. First, there is no explanation as to what reasonable
grounds for termination may be and, second, there is nothing specific with
regard to providing notice. Should a franchisor allow the franchisee to cure the
default How much time should the franchisee be allotted to cure the default
Should there be exemptions to providing a franchisee with the right to cure
Since Manitoba's common law does not address the issue of franchise
termination, a statutory provision should be introduced.
Iowa's legislation should be considered as a model since it is recognized as being
the most comprehensive. 109 Iowa's termination provisions begin by stating:
Except as otherwise provided by this chapter, a franchisor shaH not terminate a
franchise prior to the expiration of its terms except for good cause. For the purposes of
this section, "good cause" is cause based upon a legitimate business reason. 110
11
The Iowa Act further states that good cause" includes the failure of a
franchisee to comply with any material lawful requirement of the franchise
agreement, provided that the termination by the franchisor is not arbitrary or
capricious when compared to the actions of the franchisor in other similar
circumstances. m The Act provides the franchisee with the opportunity to cure
the alleged default after receiving written notice stating the basis for the
proposed termination. The Act also includes an exemption for termination
without providing the franchisee the opportunity to cure, such as when the
franchisee or the business to which the franchise relates is declared bankrupt. 112
The length of time a franchisor will grant a franchisee to cure an alleged default
is an essential matter pertaining to termination of a franchise agreement. Iowa's
legislation states that after service of notice, the franchisee shall have a
reasonable period of time to cure the default, which in no event shall be less
than 30 days and no more than 90 days. 113 In contrast, Australia's Trade
Practices Act 1974 states that the franchisor must allow the franchisee a
108
Supra note 11.
109
Manitoba Law Reform Canmission, supra note 14 at 52.
110
1992 Franchises Act, Iowa Code § 523H.7.1.
m Ibid.
112
Ibid.at§523H..2 and§523H.7.3.
113
Ibid. at §523H.7.2.