UTGB Vol 5.pdf - Robson Hall Faculty of Law

118 Underneath the Golden Boy
notice shall be deemed a notice of intention not to renew at the end of the
franchise term. 122
Under the Illinois Franchise Disclosure Act of 1987, it is deemed a violation of the
Act for a franchisor to refuse to renew a franchise of a franchised business
without compensating the franchisee either by repurchase or by other means for
the diminution in the value of the franchised business caused by the expiration
of the franchise. This shall be so where (a) the franchisee is barred by the
franchise agreement (or by the refusal of the franchisor at least six months prior
to the expiration date of the franchise to waive any portion of the franchise
agreement which prohibits the franchisee) from continuing to conduct
substantially the same business under another trademark, servicemark, trade
name or commercial symbol in the same area subsequent to the expiration of
the franchise; or (b) the franchisee has not been sent notice of the franchisor's
intent not to renew the franchise at least six months prior to the expiration date
or any extension thereof of the franchise. 123
Iowa's 1992 Franchises Act establishes that a franchisor shall not refuse to renew
a franchise unless both of the following apply: (a) the franchisee has been
notified of the franchisor's intent not to renew at least six months prior to the
expiration date or any extension of the franchise agreement; or (b) any of the
following circumstances exist:
(1) Good cause exists, provided that the refusal of the franchisor to renew is not
arbitrary or capricious [good cause means based on legitimate business reasons];
(2) The franchisor and franchisee agree not to renew the franchise;
(3) The franchisor completely withdraws from directly or indirectly distributing ts
products or services in the geographic market served by the franchisee, provided that
upon the expiration of the franchise, the franchisor agrees not to seek to enforce any
covenant of the non renewed franchisee not to compete with the franchisor or
franchisees of the franchisor. 124
Moreover, as a condition of renewal of the franchise, a franchise agreement may
require that the franchisee meet the then current requirements for franchises
and that the franchisee execute a new agreement incorporating the then
current terms and fees for new franchises. 125
In deciding what renewal provisions Manitoba should adopt, it is important to
remember that California contains the most complete renewal regulation. In
doing so, it provides sufficient protection to franchisees facing the prospect of
renewing a franchise agreement. However, if Manitoba were to adopt this
provision, a few additions should be made. Manitoba's legislation should mimic
122
Ibid. at §20025(£}.
123
Ill. Comp. Stat. § 705/20.
124
Iowa Code §523H.8.1.
125
Ibid. at §523.H.8.2.