Connecticut General Statutes 42-133x – Effects of a franchise termination, cancellation or nonrenewal
(a) In the event of a termination, cancellation or nonrenewal under subdivision (2) of subsection (b) of section 42-133v or subsection (b) of this section:
Terms Used In Connecticut General Statutes 42-133x
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- month: means a calendar month, and the word "year" means a calendar year, unless otherwise expressed. See Connecticut General Statutes 1-1
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
(1) If the dealer is leasing the dealership facilities from a lessor other than the manufacturer or distributor, or owns the dealership facilities, the manufacturer or distributor shall pay a reasonable rent to the dealer in accordance with and subject to subdivision (2) of this subsection.
(2) Such reasonable rent shall be paid only to the extent that the dealership premises are recognized in the franchise and only if they are not substantially in excess of those facilities recommended by the manufacturer or distributor. If the facility is used for the operation of more than one franchise, the reasonable rent shall be paid based upon the portion of the facility utilized by the franchise being terminated, cancelled or nonrenewed.
(3) If the facilities are owned by the dealer, the manufacturer or distributor will either: (A) Locate a purchaser who will offer to purchase the dealership facilities at a reasonable price, or (B) locate a lessee who will offer to lease the premises for a reasonable term at a reasonable rent, or (C) failing the foregoing, lease the dealership facilities at a reasonable rent for one year.
(4) If the facilities are leased by the dealer, the manufacturer or distributor will either: (A) Locate a tenant satisfactory to the lessor, who will sublet or assume the balance of the lease, or (B) arrange with the lessor for the cancellation of the lease without penalty to the dealer, or (C) failing the foregoing, lease the dealership facilities at a reasonable rate for one year.
(5) The manufacturer or distributor shall not be obligated to provide assistance under this section if the dealer: (A) Fails to accept a bona fide offer from a prospective purchaser, sublessee or assignee, or (B) refuses to execute a settlement agreement with the lessor if such agreement would be without cost to the dealer, or (C) fails to make a written request for assistance under this section not later than one month after the termination, cancellation or nonrenewal.
(b) (1) In the event of a termination, cancellation or nonrenewal due to the discontinuation of a line make, and in addition to all other compensation and repurchase obligations contained in section 42-133w and this section, the manufacturer or distributor shall pay the fair market value of the goodwill of the franchise as of the date immediately preceding the manufacturer’s announcement of the action resulting in a brand being presently, or in the future, discontinued. The dealer may immediately request payment under this subsection following the announcement in exchange for cancelling any further franchise rights, except payments owed to the dealer in the ordinary course of business, or may request payment under this subsection upon the final termination, cancellation or nonrenewal of the franchise. In either case, payment under this subsection shall be made not later than ninety days after the request by the dealer.
(2) In the event of a termination, cancellation or nonrenewal under this subsection, notwithstanding the terms of any franchise, a site-control or exclusivity provision governing any or all of the dealership facilities which operate from the location that is the subject of the site-control or exclusivity provision is void upon a termination of the franchise.
(3) In the event of a termination, cancellation or nonrenewal under this subsection, in addition to the compensation and repurchase obligations contained in section 42-133w and this section, the manufacturer or distributor shall compensate the terminated dealer in an amount equal to the amount remaining on the dealer management computer system lease or contract, or one year of lease payments, whichever is less, if (A) the dealer management system will no longer be utilized as a result of a line-make termination, and (B) the manufacturer or distributor required the dealer to use the dealer management computer system.
(c) If, in any action for damages under this section, the manufacturer or distributor fails to prove that the manufacturer or distributor has acted in good faith or that there was good cause for the franchise termination, cancellation or nonrenewal, then the manufacturer or distributor may terminate, cancel or fail to renew the franchise upon payment to the motor vehicle dealer of an amount equal to the value of the dealership as an ongoing business location as agreed by the parties or, lacking agreement, as determined by the court.