§ 4-72-402 - Franchise -- Cancellation or termination. - Arkansas Statutes

4-72-402. Franchise -- Cancellation or termination.

(a) A petroleum products supplier shall not cancel, or otherwise terminate, a franchise with a petroleum products distributor, except for such specific reasons as shall be prescribed in the franchise.

(b) (1) If a petroleum products supplier proposes to cancel, fail to renew, or otherwise terminate a franchise with any distributor, he or she shall so notify the distributor by certified mail at least six (6) months prior to the date on which he or she proposes to cancel, fail to renew, or terminate the franchise.

(2) The notice shall include a statement of the grounds upon which the supplier bases his or her right to cancel or terminate the franchise.

(c) Only the following matters shall be included in the franchise as grounds for a petroleum products supplier to cancel or terminate the franchise of a petroleum products distributor:

(1) Criminal misconduct or willful violation of law relating to the business or premises of the supplier;

(2) Fraud;

(3) Failure of the distributor to pay taxes and to obtain and maintain all licenses, permits, and other authority necessary to conduct business as a distributor;

(4) Abandonment or unattendance of the business or premises of the supplier for such a period of time as may be specified in the franchise;

(5) Bankruptcy or insolvency of the distributor;

(6) The failure by the distributor to pay the supplier for petroleum products purchased or received on consignment from the supplier within the time and in the manner prescribed in the franchise;

(7) Nonpayment of rent or the loss by the refiner of its legal right to grant a distributor possession of the leased premises at which the business is located, if applicable, in which case, the supplier may terminate a distributor's marketing agreement upon a thirty-day notice of intent to terminate the agreement;

(8) Death or incapacity of the distributor or the termination or dissolution of a partnership or corporation;

(9) Adulteration or misrepresentation of products, provided that adulteration or misrepresentation which results from accident or circumstance beyond the control of the distributor shall not be grounds for termination;

(10) Force majeure, condemnation, or other public taking; or

(11) Failure of the distributor to substantially comply with any reasonable provisions of any lease agreement on bulk plant property between the supplier as lessor and the distributor as lessee.

(d) However, if a distributor violates subdivisions (c)(1), (2), or (4)-(6) of this section, the supplier having the right to terminate the marketing agreement may immediately terminate the agreement.