Delaware Code Title 6 Sec. 4906 – Termination, cancellation or nonrenewal of franchise — …
(a) Notwithstanding the terms, provisions or conditions of any franchise or notwithstanding the terms or provisions of any waiver, no manufacturer shall cancel, terminate or fail to renew any franchise with a licensed new motor vehicle dealer unless the manufacturer has:
(1) Satisfied the notice requirement of subsection (d) of this section; and
(2) Has good cause for cancellation, termination or nonrenewal; and
(3) Has acted in good faith with regard to the cancellation, termination or nonrenewal as defined in this chapter.
Terms Used In Delaware Code Title 6 Sec. 4906
- Appeal: A request made after a trial, asking another court (usually the court of appeals) to decide whether the trial was conducted properly. To make such a request is "to appeal" or "to take an appeal." One who appeals is called the appellant.
- Commission: means the Public Service Commission. See Delaware Code Title 6 Sec. 4902
- Conviction: A judgement of guilt against a criminal defendant.
- dealer: includes any person who engages exclusively in the repair of motor vehicles, except motor homes, if such repairs are performed pursuant to the terms of a franchise or other agreement with a franchiser or such repairs are performed as part of a manufacturer's or franchiser's warranty. See Delaware Code Title 6 Sec. 4902
- Distributor: which means any person, resident or nonresident, who in whole or in part offers for sale, sells or distributes any new motor vehicle to new motor vehicle dealers or who maintains factory representatives or who controls any person, firm, association, corporation or trust, resident or nonresident, who in whole or in part offers for sale, sells or distributes any new motor vehicle to new motor vehicle dealers. See Delaware Code Title 6 Sec. 4902
- Franchise: means the written agreement or contract between any new motor vehicle manufacturer and any new motor vehicle dealer which purports to fix the legal rights and liabilities of the parties to such agreement or contract, and pursuant to which the dealer purchases and resells the franchise product or leases or rents the dealership premises. See Delaware Code Title 6 Sec. 4902
- Good faith: means honesty in fact and the observation of reasonable commercial standards of fair dealing in the trade as defined and interpreted in § 1-201(b)(20) of this title. See Delaware Code Title 6 Sec. 4902
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Knowledge: means a person's actual knowledge of a fact, rather than the person's constructive knowledge of the fact. See Delaware Code Title 6 Sec. 17-101
- Manufacturer: includes the following terms:
- Motor vehicle: means every vehicle intended primarily for use and operation on the public highways which is self-propelled, not including motor homes, motor home products and recreational vehicles, farm tractors and other machines and tools used in the production, harvesting and care of farm products. See Delaware Code Title 6 Sec. 4902
- New motor vehicle: means a vehicle which has been sold to a new motor vehicle dealer and which has not been used for other than demonstration purposes and on which the original title has not been issued from the new motor vehicle dealer. See Delaware Code Title 6 Sec. 4902
(b) Notwithstanding the terms, provisions or conditions of any franchise or the terms or provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation or nonrenewal when:
(1) There is a failure by the new motor vehicle dealer to comply with a provision of the franchise which provision is both reasonable and of material significance to the franchise relationship, provided that the dealer has been notified in writing of the failure within 180 days after the manufacturer first acquired knowledge of such failure, or after the dealer was given a reasonable opportunity to correct such failure during a period of not less than 6 months;
(2) If the failure by the new motor vehicle dealer relates to the performance of the new motor vehicle dealer in sales or service, then good cause shall be defined as the failure of the new motor vehicle dealer to comply with reasonable performance criteria established by the manufacturer if the new motor vehicle dealer was apprised by the manufacturer in writing of such failure; and:
a. Said notification stated that notice was provided of failure of performance pursuant to this section;
b. The new motor vehicle dealer was afforded a reasonable opportunity, for a period of not less than 6 months, to comply with such criteria; and
c. The new motor vehicle dealer did not demonstrate substantial compliance with the manufacturer’s performance criteria during such period.
(c) The manufacturer shall have the burden of proof under this section.
(d) Notwithstanding the terms, provisions or conditions of any franchise prior to the termination, cancellation or nonrenewal of any franchise, the manufacturer shall furnish notification of such termination, cancellation or nonrenewal to the new motor vehicle dealer as follows:
(1) In the manner described in subsection (b) of this section; and
(2) Not less than 90 days prior to the effective date of such termination, cancellation or nonrenewal; or
(3) Not less than 15 days prior to the effective date of such termination, cancellation or nonrenewal with respect to any of the following:
a. Insolvency of the new motor vehicle dealer, or filing of any petition by or against the new motor vehicle dealer under any bankruptcy or receivership law;
b. Failure of the new motor vehicle dealer to conduct its customary sales and service operations during its customary business hours for 7 consecutive business days, except for acts of God or circumstances beyond the direct control of the new motor vehicle dealer;
c. Conviction in a court of original jurisdiction of the new motor vehicle dealer, or any owner or operator thereof, of any crime which is punishable by imprisonment;
d. Revocation of any license which the new motor vehicle dealer is required to have to operate a dealership.
(4) Not less than 180 days prior to the effective date of such termination or cancellation where the manufacturer or distributor is discontinuing the sale of the product line.
(e) Notification under this section shall be in writing; shall be by certified mail or personally delivered to the new motor vehicle dealer; and shall contain all of the following:
(1) A statement of intention to terminate, cancel, or not to renew the franchise.
(2) A statement of the reasons for the termination, cancellation, or nonrenewal.
(3) The date on which such termination, cancellation, or nonrenewal takes effect.
(f) (1) If a manufacturer provides notice of termination to a new motor vehicle dealer under subsection (e) of this section, the dealer may file with the Commission a protest to the proposed franchise termination on or before the stated effective date of the termination.
(2) If such a protest is filed, the Commission shall inform the manufacturer that a timely protest has been filed, and that the franchise in question continues in effect until the Commission holds a hearing, or thereafter, unless, the Commission determines that the manufacturer has complied with paragraphs (a)(2) and (a)(3) of this section.
(3) Until the termination of a dealer’s franchise is effective, the dealer continues to have the same rights to assign, sell, or transfer the franchise to a third party under the franchise and as permitted under § 4910 of this title and the transferee may not be subject to termination by reason of the failure of performance or breaches of the franchise on the part of the dealer.
(4) The nonprevailing party may appeal an adverse decision by the Commission to the Superior Court. The Commission may enter a stay of its order pending appeal, which remains in effect while the appeal is pending.