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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2022

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A N   A C T

RELATING TO COMMERCIAL LAW -- GENERAL REGULATORY PROVISIONS THE

     RHODE ISLAND DEALERSHIP PRESERVATION AND PROTECTION ACT

     

     Introduced By: Representatives Baginski, and Solomon

     Date Introduced: January 26, 2022

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 6-54-2, 6-54-4 and 6-54-9 of the General Laws in Chapter 6-54

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entitled "General Regulatory Provisions The Rhode Island Dealership Preservation And Protection

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Act" are hereby amended to read as follows:

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     6-54-2. Definitions.

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     As used in this chapter:

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     (1) "Community of interest" means a continuing financial interest between the grantor and

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the grantee in either the operation of the dealership business or the marketing of such goods or

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services;

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     (2) "Continuing financial interest" means the following:

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     (i) A dealership relationship of at least one year in duration between the grantor and dealer,

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without regard to:

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     (A) Any minimum percentage of revenue or profit derived therefrom by the dealer;

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     (B) Any minimum financial investment by the dealer; or

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     (C) The aggregate economic size or level of activity by the dealer or its affiliates; and

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     (ii) The dealer has expended, allocated or dedicated revenue or personnel to promoting the

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sale or distribution of the grantor's goods or services, including investments in grantor inventory,

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sales and marketing, or facilities; and

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     (iii) Dealer and grantor cooperate, coordinate activities, or share common goals;

 

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     (2)(3) "Dealer" means a person who is a grantee of a dealership situated in this state, and

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any successor in interest, regardless of the subsequent sale or change in ownership of such entity;

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     (3)(4) "Dealership" means any of the following:

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     (i) A contract or agreement, either expressed or implied, whether oral or written, between

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two (2) or more persons, by which a person is granted the right to sell or distribute goods or services,

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or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol,

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in which there is a community of interest in the business of offering, selling or distributing goods

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or services at wholesale, retail, by lease, agreement or otherwise.

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     (4)(5) "Good cause" means, for the purposes of this act, good cause for terminating,

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diminishing, canceling or nonrenewal shall mean:

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     (i) The failure by the dealer to substantially comply with the reasonable requirements

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imposed by the grantor; or

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     (ii) Any of the reasons listed in subdivisions 6-54-4(a)(1) through (a)(6). A sale or change

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in ownership shall not constitute good cause.

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     (5)(6) "Grantor" means a person who grants a dealership, and any successor in interest,

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regardless of the subsequent sale or change in ownership of such person;

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     (6)(7) "Person" means a natural person, partnership, joint venture, corporation or other

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entity. ;

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     (8) "Sale or change in ownership" means with respect to any grantor or dealer, the direct

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or indirect sale of such person's assets or equity ownership, whether by merger or sale or other

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change in control event. A sale or change in ownership shall be considered for purposes of this

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chapter as a continuation of the prior dealership relationship and shall not be deemed to have

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interrupted, ended or restarted such relationship between the parties.

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     6-54-4. Notice of termination or change in dealership.

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     (a) Notwithstanding the terms, provisions, or conditions of any agreement to the contrary,

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a grantor shall provide a dealer sixty (60) days prior written notice of termination, cancellation, or

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nonrenewal. The notice shall state all reasons for termination, cancellation or nonrenewal and shall

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provide that the dealer has thirty (30) days in which to cure any claimed deficiency; provided, that

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a dealer has a right to cure three (3) times in any twelve (12) month period during the period of the

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dealership agreement. The sixty (60) day notice provisions of this section shall not apply and the

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termination, cancellation or nonrenewal may be made effective immediately upon written notice,

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if the reason for termination, cancellation or nonrenewal is in the event the dealer:

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     (1) Voluntarily abandons the dealership relationship;

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     (2) Is convicted of a felony offense related to the business conducted pursuant to the

 

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dealership;

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     (3) Engages in any substantial act which tends to materially impair the goodwill of the

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grantor's trade name, trademark, service mark, logotype or other commercial symbol;

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     (4) Makes a material misrepresentation of fact to the grantor relating to the dealership;

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     (5) Attempts to transfer the dealership (or a portion thereof) without authorization of the

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grantor, excluding a sale or change of ownership; or

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     (6) Is insolvent, files or suffers to be filed against it any voluntary or involuntary

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bankruptcy petition, or makes an assignment for the benefit of creditors or similar disposition of

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assets of the dealer business.

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     (b) If the reason for termination, cancellation, or nonrenewal is nonpayment of sums due

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under the dealership, the dealers shall be entitled to written notice of such default, and shall have

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ten (10) days in which to cure such default from the date of such notice. A dealer has the right to

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cure three (3) times in any twelve (12) month period during the period of the dealership agreement.

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     (c) If the reason for termination, cancellation or nonrenewal is for violation of any law,

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regulation or standard relating to public health or safety, the dealer shall be entitled to immediate

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written notice and shall have twenty-four (24) hours five (5) days to cure such violation from the

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date of receipt of the written notice.

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     (d) No grantor may terminate, cancel or fail to renew a dealership, directly or indirectly, or

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otherwise take any action to diminish the dealership or its value, other than for good cause. No

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grantor may terminate, cancel or fail to renew a dealership, directly or indirectly, or otherwise take

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any action to diminish the dealership or its value, if the dealership shall cure the alleged deficiency

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or violation in accordance with the provisions of this chapter.

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     6-54-9. Nonapplicability.

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     This chapter shall not apply to malt beverage dealerships; motor vehicle dealerships;

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insurance agency relationships; any relationship relating to the sale or administration of insurance

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or any similar contract with an entity organized under chapters 19 or 20 of title 27; fuel distribution

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dealerships; door-to-door sales; dealers and single-line dealers as defined in ยง 6-46-2; dealerships;

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and franchises, franchisors, franchisees, dealers and dealerships that are subject to, and comply

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with or are exempt from, the provisions of chapter 28.1 of title 19, known as the "Rhode Island

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Franchise Investment Act."

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     SECTION 2. Chapter 6-54 of the General Laws entitled "General Regulatory Provisions

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The Rhode Island Dealership Preservation And Protection Act" is hereby amended by adding

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thereto the following section:

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     6-54-10. Exclusive jurisdiction.

 

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     Notwithstanding any agreements between grantor and dealer to the contrary, the courts in

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Rhode Island shall have the exclusive jurisdiction over any disputes arising out of or relating to this

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chapter including, but not limited to, any claim for which a dealer relies on this chapter as a defense

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to any purported termination, cancellation, or failure to renew.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO COMMERCIAL LAW -- GENERAL REGULATORY PROVISIONS THE

     RHODE ISLAND DEALERSHIP PRESERVATION AND PROTECTION ACT

***

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     This act would exclude the sale or change of ownership as good cause to terminate, cancel,

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or failure to renew a dealership contract or agreement, allow dealerships five (5) days to cure any

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deficiency or violation of the contract or agreement, and vest exclusive jurisdiction in Rhode Island

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courts to settle any disputes.

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     This act would take effect upon passage.

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