15 U.S.C. § 2804 — Notification of termination or nonrenewal

Page 1950 TITLE 15—COMMERCE AND TRADE § 2803 (1) if such termination or nonrenewal is based upon an event described in subsection (c)(5), the franchisor shall fairly apportion be- tween the franchisor and the franchisee com- pensation, if any, received by the franchisor based upon any loss of business opportunity or good will; and (2) if such termination or nonrenewal is based upon an event described in subsection (c)(7) and the leased marketing premises are subsequently rebuilt or replaced by the franchisor and operated under a franchise, the franchisor shall, within a reasonable period of time, grant to the franchisee a right of first refusal of the franchise under which such premises are to be operated. (Pub. L. 95–297, title I, § 102, June 19, 1978, 92 Stat. 324; Pub. L. 103–371, §§ 2, 3, Oct. 19, 1994, 108 Stat. 3484.) Editorial Notes AMENDMENTS 1994—Subsec. (b)(3)(A)(ii). Pub. L. 103–371, § 2, inserted ‘‘converting the leased marketing premises to oper- ation by employees or agents of the franchisor for the benefit of the franchisor or otherwise’’ after ‘‘purpose of’’. Subsec. (c)(4). Pub. L. 103–371, § 3, redesignated por- tion of introductory language of par. (4) as subpar. (A), redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A), and added subpars. (B) and (C). § 2803. Trial and interim franchises (a) Nonapplicability of statutory nonrenewal provisions The provisions of section 2802 of this title shall not apply to the nonrenewal of any fran- chise relationship— (1) under a trial franchise; or (2) under an interim franchise. (b) Definitions For purposes of this section— (1) The term ‘‘trial franchise’’ means any franchise— (A) which is entered into on or after June 19, 1978; (B) the franchisee of which has not pre- viously been a party to a franchise with the franchisor; (C) the initial term of which is for a period of not more than 1 year; and (D) which is in writing and states clearly and conspicuously— (i) that the franchise is a trial franchise; (ii) the duration of the initial term of the franchise; (iii) that the franchisor may fail to renew the franchise relationship at the conclusion of the initial term stated in the franchise by notifying the franchisee, in accordance with the provisions of section 2804 of this title, of the franchisor’s inten- tion not to renew the franchise relation- ship; and (iv) that the provisions of section 2802 of this title, limiting the right of a franchisor to fail to renew a franchise rela- tionship, are not applicable to such trial franchise. (2) The term ‘‘trial franchise’’ does not in- clude any unexpired period of any term of any franchise (other than a trial franchise, as de- fined by paragraph (1)) which was transferred or assigned by a franchisee to the extent au- thorized by the provisions of the franchise or any applicable provision of State law which permits such transfer or assignment, without regard to any provision of the franchise. (3) The term ‘‘interim franchise’’ means any franchise— (A) which is entered into on or after June 19, 1978; (B) the term of which, when combined with the terms of all prior interim franchises be- tween the franchisor and the franchisee, does not exceed 3 years; (C) the effective date of which occurs im- mediately after the expiration of a prior franchise, applicable to the marketing prem- ises, which was not renewed if such non- renewal— (i) was based upon a determination de- scribed in section 2802(b)(2)(E) of this title, and (ii) the requirements of section 2802(b)(2)(E) of this title were satisfied; and (D) which is in writing and states clearly and conspicuously— (i) that the franchise is an interim fran- chise; (ii) the duration of the franchise; and (iii) that the franchisor may fail to renew the franchise at the conclusion of the term stated in the franchise based upon a determination made by the franchisor in good faith and in the normal course of business to withdraw from the marketing of motor fuel through retail outlets in the relevant geographic market area in which the marketing premises are located if the requirements of section 2802(b)(2)(E)(ii) and (iii) of this title are satisfied. (c) Nonrenewal upon meeting statutory notifica- tion requirements If the notification requirements of section 2804 of this title are met, any franchisor may fail to renew any franchise relationship— (1) under any trial franchise, at the conclu- sion of the initial term of such trial franchise; and (2) under any interim franchise, at the con- clusion of the term of such interim franchise, if— (A) such nonrenewal is based upon a deter- mination described in section 2802(b)(2)(E) of this title; and (B) the requirements of section 2802(b)(2)(E)(ii) and (iii) of this title are sat- isfied. (Pub. L. 95–297, title I, § 103, June 19, 1978, 92 Stat. 328.) § 2804. Notification of termination or nonrenewal of franchise relationship (a) General requirements applicable to franchisor Prior to termination of any franchise or non- renewal of any franchise relationship, the Page 1951 TITLE 15—COMMERCE AND TRADE § 2805 franchisor shall furnish notification of such ter- mination or such nonrenewal to the franchisee who is a party to such franchise or such fran- chise relationship— (1) in the manner described in subsection (c); and (2) except as provided in subsection (b), not less than 90 days prior to the date on which such termination or nonrenewal takes effect. (b) Additional requirements applicable to franchisor (1) In circumstances in which it would not be reasonable for the franchisor to furnish notifica- tion, not less than 90 days prior to the date on which termination or nonrenewal takes effect, as required by subsection (a)(2)— (A) such franchisor shall furnish notification to the franchisee affected thereby on the ear- liest date on which furnishing of such notifica- tion is reasonably practicable; and (B) in the case of leased marketing premises, such franchisor— (i) may not establish a new franchise rela- tionship with respect to such premises be- fore the expiration of the 30-day period which begins— (I) on the date notification was posted or personally delivered, or (II) if later, on the date on which such termination or nonrenewal takes effect; and (ii) may, if permitted to do so by the fran- chise agreement, repossess such premises and, in circumstances under which it would be reasonable to do so, operate such prem- ises through employees or agents. (2) In the case of any termination of any fran- chise or any nonrenewal of any franchise rela- tionship pursuant to the provisions of section 2802(b)(2)(E) of this title or section 2803(c)(2) of this title, the franchisor shall— (A) furnish notification to the franchisee not less than 180 days prior to the date on which such termination or nonrenewal takes effect; and (B) promptly provide a copy of such notifica- tion, together with a plan describing the schedule and conditions under which the franchisor will withdraw from the marketing of motor fuel through retail outlets in the rel- evant geographic area, to the Governor of each State which contains a portion of such area. (c) Manner and form of notification Notification under this section— (1) shall be in writing; (2) shall be posted by certified mail or per- sonally delivered to the franchisee; and (3) shall contain— (A) a statement of intention to terminate the franchise or not to renew the franchise relationship, together with the reasons therefor; (B) the date on which such termination or nonrenewal takes effect; and (C) the summary statement prepared under subsection (d). (d) Preparation, publication, etc., of statutory summaries (1) Not later than 30 days after June 19, 1978, the Secretary of Energy shall prepare and pub- lish in the Federal Register a simple and concise summary of the provisions of this subchapter, including a statement of the respective respon- sibilities of, and the remedies and relief avail- able to, any franchisor and franchisee under this subchapter. (2) In the case of summaries required to be fur- nished under the provisions of section 2802(b)(2)(D) of this title or subsection (c)(3)(C) of this section before the date of publication of such summary in the Federal Register, such summary may be furnished not later than 5 days after it is so published rather than at the time required under such provisions. (Pub. L. 95–297, title I, § 104, June 19, 1978, 92 Stat. 329.) § 2805. Enforcement provisions (a) Maintenance of civil action by franchisee against franchisor; jurisdiction and venue; time for commencement of action If a franchisor fails to comply with the re- quirements of section 2802, 2803, or 2807 of this title, the franchisee may maintain a civil action against such franchisor. Such action may be brought, without regard to the amount in con- troversy, in the district court of the United States in any judicial district in which the prin- cipal place of business of such franchisor is lo- cated or in which such franchisee is doing busi- ness, except that no such action may be main- tained unless commenced within 1 year after the later of— (1) the date of termination of the franchise or nonrenewal of the franchise relationship; or (2) the date the franchisor fails to comply with the requirements of section 2802, 2803, or 2807 of this title. (b) Equitable relief by court; bond requirements; grounds for nonexercise of court’s equitable powers (1) In any action under subsection (a), the court shall grant such equitable relief as the court determines is necessary to remedy the ef- fects of any failure to comply with the require- ments of section 2802, 2803, or 2807 of this title, including declaratory judgment, mandatory or prohibitive injunctive relief, and interim equi- table relief. (2) Except as provided in paragraph (3), in any action under subsection (a), the court shall grant a preliminary injunction if— (A) the franchisee shows— (i) the franchise of which he is a party has been terminated or the franchise relation- ship of which he is a party has not been re- newed, and (ii) there exist sufficiently serious ques- tions going to the merits to make such ques- tions a fair ground for litigation; and (B) the court determines that, on balance, the hardships imposed upon the franchisor by the issuance of such preliminary injunctive re- lief will be less than the hardship which would be imposed upon such franchisee if such pre- liminary injunctive relief were not granted. (3) Nothing in this subsection prevents any court from requiring the franchisee in any ac-