(a) No supplier, directly or through an officer, agent or employee, may terminate, cancel, fail to renew or substantially change the competitive circumstances of a retail agreement without good cause. “Good cause” means failure by a dealer to comply with requirements imposed upon the dealer by the retail agreement if the requirements are not different from those imposed on other dealers similarly situated in this state. In addition, good cause exists whenever:

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Terms Used In Tennessee Code 47-25-1903

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Dealer: means any person engaged in the business of selling and retailing inventory, who enters into a retail agreement, and who, under the terms of the agreement receives inventory from the supplier. See Tennessee Code 47-25-1902
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: means a sole proprietor, partnership, corporation, or any other form of business organization. See Tennessee Code 47-25-1902
  • Retail agreement: means an agreement, including a franchise agreement that meets the requirements of a retail agreement, whether express, implied, oral, or written, between two (2) or more persons:
    (A) By which a person receives the right to:
    (i) Sell or lease inventory or services at retail or wholesale. See Tennessee Code 47-25-1902
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Supplier: includes a:
    (A) Wholesaler. See Tennessee Code 47-25-1902
  • Terminate: includes the failure to renew. See Tennessee Code 47-25-1902
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(1) There has been a closeout on the sale of a substantial part of the dealer’s assets related to the business, or there has been a commencement of a dissolution or liquidation of the dealer;
(2) The dealer has changed its principal place of business or added additional locations without prior approval of the supplier, which shall not be unreasonably withheld;
(3) The dealer has substantially defaulted under a chattel mortgage or other security agreement between the dealer and the supplier, or there has been a revocation or discontinuance of a guarantee of a present or future obligation of the dealer to the supplier;
(4) The dealer has failed to operate in the normal course of business for seven (7) consecutive days or has otherwise abandoned the business;
(5) The dealer has pleaded guilty to or has been convicted of a felony affecting the relationship between the dealer and the supplier; or
(6) The dealer transfers an interest in the dealership, or a person with a substantial interest in the ownership or control of the dealership, including an individual proprietor, partner or major shareholder, withdraws from the dealership or dies, or a substantial reduction occurs in the interest of a partner or major shareholder in the dealership; however, good cause does not exist if the supplier consents to an action described in this subdivision (a)(6).
(b) Except as otherwise provided in this section, a supplier shall provide a dealer with at least ninety (90) days’ written notice of termination, cancellation or nonrenewal of the retail agreement and a sixty-day right to cure the deficiency. If the deficiency is cured within the allotted time, the notice is void. In a case where cancellation is enacted due to market penetration, a reasonable period of time shall have existed where the supplier has worked with the dealer to gain the desired market share. The notice shall state all reasons constituting good cause for termination, cancellation or nonrenewal of the retail agreement.
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