32-6E-1      Definition of terms.
32-6E-2      Termination of franchise--Hearing.
32-6E-3      Determination of cause for termination of franchise.
32-6E-4      Additional franchises of same line/make--Public interest--Hearing.
32-6E-5      Determination of cause for additional franchises of same line/make.
32-6E-6      Nonconsiderations for termination of franchises or additional same line/make franchises.
32-6E-7      Impermissible conditions of franchise.
32-6E-8      Franchisor's notice of franchise termination or addition of same line/make franchises.
32-6E-9      Notice to franchisee--Interested parties.
32-6E-10      Objection to approval of notice.
32-6E-11      Hearing on timely objection to approval of notice.
32-6E-12      Hearing on objection to notice--Franchisor's burden of proof.
32-6E-13      Hearing to determine change in circumstances sufficient to support dealership.
32-6E-14      Violation of chapter.

32-6E-1. Definition of terms.

Terms used in this chapter mean:

(1)    "Community," the franchisee's area of responsibility as stipulated in the franchise. A community has a minimum radius of ten miles around an existing dealership;

(2)    "Department," the Department of Revenue;

(3)    "Franchise," a written agreement or contract between a franchisor and a franchisee which fixes the legal rights and liabilities of the parties to such agreement or contract;

(4)    "Franchisee," any person who receives snowmobiles from a franchisor under a franchise and who offers and sells the snowmobiles to the general public;

(5)    "Franchisor," any person engaged in the manufacturing or distribution of snowmobiles including any person who acts for the franchisor;

(6)    "Manufacturer," any person who manufactures or assembles snowmobiles and who issues the original or first manufacturer's statement of origin. The term, manufacturer, includes a central or principal sales corporation through which it distributes its products to franchised dealers;

(7)    "Snowmobile dealer," any person who, for commission or with intent to make a profit or gain, sells, exchanges, rents with option to purchase, offers, or attempts to negotiate a sale or exchange of new or used snowmobiles, or who is engaged wholly or in part in the business of selling new or used snowmobiles.

Source: SL 1994, ch 248, § 1; SL 2004, ch 17, § 96; SL 2011, ch 1 (Ex. Ord. 11-1), § 161, eff. Apr. 12, 2011.

32-6E-2. Termination of franchise--Hearing.

No franchisor may terminate or refuse to continue any franchise unless the franchisor has first established in a hearing held under the provisions of chapter 1-26, that:

(1)    The franchisor has cause for termination or noncontinuance; and

(2)    Upon termination or noncontinuance, another franchise in the same line/make will become effective in the same community without diminution of the snowmobile service formerly provided or that the community cannot be reasonably expected to support such a dealership.

Source: SL 1994, ch 248, § 2.

32-6E-3. Determination of cause for termination of franchise.

In determining whether cause is established for terminating or not continuing a franchise, the department shall consider the existing circumstances including:

(1)    Failure by the franchisee to comply with requirements imposed upon him by the franchise, which requirements are both essential and reasonable;

(2)    Bad faith on the part of the franchisee in carrying out the terms of the franchise;

(3)    Whether the franchise has adequate new snowmobile facilities, equipment, parts, and qualified management, sales, and service personnel to reasonably provide consumer care for the new snowmobiles sold at retail by the franchisee;

(4)    Whether the franchisee refuses to honor warranties of the franchisor to be performed by the franchisee if the franchisor reimburses the franchisee for such warranty work performed by the franchisee; or

(5)    Whether it is injurious to the public welfare for the business of the franchisee to be discontinued.

Source: SL 1994, ch 248, § 3.

32-6E-4. Additional franchises of same line/make--Public interest--Hearing.

No franchisor may enter into a franchise for the purpose of establishing an additional snowmobile dealership in any community in which the same line/make is currently represented, unless the franchisor has first established in a hearing held under the provisions of chapter 1-26 that an additional dealership under such franchise is in the public interest.

Source: SL 1994, ch 248, § 4.

32-6E-5. Determination of cause for additional franchises of same line/make.

In determining whether cause is established for entering into an additional franchise for the same line/make, the department shall consider the existing circumstances:

(1)    The amount of business transacted by existing franchisee's of the same line/make in that community;

(2)    Whether the franchisee's of the same line/make in that community are making a good faith effort to sell the franchisor's product;

(3)    Investment necessarily made and obligations incurred by existing franchisee's of the same line/make in the community in the performance of their part of their franchises;

(4)    The effect on the retail snowmobile business as a whole in that community;

(5)    The general quality and reputation of existing franchises in the community and their ability to provide consumer care and service; and

(6)    Whether it is injurious to the public interest for an additional franchise to be established.

Source: SL 1994, ch 248, § 5.

32-6E-6. Nonconsiderations for termination of franchises or additional same line/make franchises.

The following circumstances are not cause for the termination or noncontinuance of a franchise, nor for entering into a franchise for the establishment of an additional dealership in a community for the same line/make:

(1)    The change of executive management or ownership by the franchisee, unless the franchisor can show that the change would be detrimental to the representation or reputation of the franchisor's product;

(2)    Refusal by the franchisee to purchase or accept delivery of any snowmobiles, parts, accessories, or any other commodity or service not ordered by said franchisee;

(3)    The sole fact that franchisor desires further penetration of the market;

(4)    The fact that the franchisee owns, has an investment in, participates in the management of, or hold a franchise for the sale of another line/make of snowmobile, or that the franchisee has established another line/make of snowmobiles in the same dealership facilities as those of the franchisor, if the franchisee maintains a reasonable line of credit for each line/make of snowmobile; or

(5)    Refusal by the dealer to participate in any advertising campaign or contest or purchase any promotional materials, display devices, or display decoration or materials which are at the expense of the dealer.

Source: SL 1994, ch 248, § 6.

32-6E-7. Impermissible conditions of franchise.

No franchisor may require a franchisee to agree to the inclusion of a term or condition in a franchise, or in any lease or agreement ancillary or collateral to a franchise as a condition to the offer, grant, or renewal of such franchise, lease, or agreement, that:

(1)    Requires the franchisee to waive trial by jury in any case involving the franchisor;

(2)    Specifies the jurisdictions, venues, or tribunals in which disputes arising with respect to the franchise, lease, or agreement shall or may not be submitted for resolution or otherwise prevents a franchisee from bringing an action in a particular forum otherwise available under the law; or

(3)    Requires that disputes between the franchisor and franchisee be submitted to arbitration or to any other binding alternate dispute resolution procedure.

However, any franchise, lease, or agreement may authorize the submission of a dispute to arbitration or to binding alternate dispute resolution if the franchisor and franchisee voluntarily agree to submit the dispute to arbitration or binding alternate dispute resolution at the time the dispute arises.

Source: SL 1994, ch 248, § 7.

32-6E-8. Franchisor's notice of franchise termination or addition of same line/make franchises.

If a franchisor seeks to terminate or not continue a franchise or seeks to enter into an additional franchise of the same line/make, the franchisor shall file a notice with the department of intention to terminate or not continue the franchise or to enter into a franchise for additional representation of the same line/make. This section does not apply to any intended termination or noncontinuance of a franchise which the franchisee elects voluntarily.

Source: SL 1994, ch 248, § 8.

32-6E-9. Notice to franchisee--Interested parties.

Upon receiving a notice of intention, the department shall, within five days, send by first class mail, a copy of the notice to the franchisee whose franchise the franchisor seeks to terminate or not continue. If the notice seeks to establish an additional franchise, a copy of the notice shall be sent within five days of receipt to all franchisees in the community who are engaged in the business of offering to sell or selling the same line/make. The department may also give a copy of the franchisor's notice to any other party which it considers an interested person.

Source: SL 1994, ch 248, § 9.

32-6E-10. Objection to approval of notice.

Any person who receives or is entitled to receive a copy of any notice provided for in § 32-6E-8, may object to the approval of the notice by filing a written objection to the department within fifteen days from the date the notice was received by such person. If no objection is filed within fifteen days from the date the notice was received by such person, the notice shall be approved.

Source: SL 1994, ch 248, § 10.

32-6E-11. Hearing on timely objection to approval of notice.

If a timely objection is filed, the department shall enter an order fixing the time, which shall be within thirty days of the date of such order, and place of a hearing on the objection and shall send by first class mail a copy of the order to the franchisor, franchisee, and any other persons entitled to receive a copy of the notice provided for in § 32-6E-8. The department may, upon request, continue the date of hearing for a period of thirty days.

Source: SL 1994, ch 248, § 11.

32-6E-12. Hearing on objection to notice--Franchisor's burden of proof.

Upon a hearing conducted pursuant to the provisions of chapter 1-26, the franchisor has the burden of proof to establish that cause exists to terminate or not continue the franchise or to enter into a franchise establishing an additional dealership.

Source: SL 1994, ch 248, § 12.

32-6E-13. Hearing to determine change in circumstances sufficient to support dealership.

If a franchisor is permitted to terminate or not to continue a franchise and is further permitted not to enter into a franchise for the line/make in the community, no franchise may be entered into for the sale of snowmobiles of that line/make in the community, unless the franchisor has first established, in a hearing held under the provisions of chapter 1-26, that there has been a change of circumstances so that the community at that time can be reasonably expected to support the dealership.

Source: SL 1994, ch 248, § 13.

32-6E-14. Violation of chapter.

If a franchisor enters into or attempts to enter into a franchise, whether upon termination or refusal to continue another franchise or upon the establishment of an additional new snowmobile dealership in a community where the same line/make is already represented, without first complying with the provisions of this chapter, no dealer's license may be issued to that franchisee or proposed franchisee to engage in the business of selling new snowmobiles, manufactured or distributed by that franchisor.

Source: SL 1994, ch 248, § 14.