Source: https://www.goldlawgroup.com/franchise-laws/michigan/
Timestamp: 2019-04-21 06:57:38+00:00

Document:
Michigan regulates franchise terminations, non-renewals and transfers in the Michigan Franchise Investment Law (“MFIL”) by identifying and prohibiting certain contractual provisions as void and unenforceable. Section 445.1527 of the MFIL declares that the following provisions are void and unenforceable in franchise documents: (a) A prohibition on the right of a franchisee to join an association of franchisees; (b) A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in the MFIL, with a note that this requirement does not prevent a franchisee, after entering into a franchise agreement, from settling claims; (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for “good cause”.
The MFIL defines “good cause as including the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure; (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings. With regard to compensation, the MFIL states that “Personalized materials” which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings “not reasonably required in the conduct of the franchise business” are not permitted bases upon which to obtain compensation. Further, this non-renewal compensation subsection applies under the MFIL only if: (i) The term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise; (e) A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. The MFIL explicitly states that “this section does not require a renewal provision”; (f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state; (g) A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for “good cause”, which does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. “Good cause” for this provision includes, but is not limited to: (i) The failure of the proposed transferee to meet the franchisor's then current reasonable qualifications or standards; (ii) The fact that the proposed transferee is a competitor of the franchisor or subfranchisor; (iii) The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations; (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer; (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor, noting that this directive does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c); (i) A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the required contractual services.
Mich. Comp. Laws §445.1451 to §445.1460 .
Mich. Comp. Laws §445.1801 to §445.1808.
Mich. Comp. Laws §445.541 to §445.547.
There is no franchise termination or relationship law in this specific market niche in Michigan.
Mich. Comp. Laws §445.1921 to §445.1949.
Victory Lane Quick Oil Change, Inc. v. Hoss, United States District Court, E.D. Michigan, Southern Division, September 28, 2001, 2001 WL 1219152 (“B. THE MFIL DOES NOT RENDER SECTIONS 18.7 AND 19 OF THE PARTIES' FRANCHISE AGREEMENT VOID AND UNENFORCEABLE. The primary basis for Defendants' Motion for Partial Summary Judgment on Plaintiff's claim for Specific Performance (Count III of Plaintiff's Complaint) is Defendants' contention that, by application of the Michigan Franchise Investment Law, Sections 18.7 and 19 of the Franchise Agreement are void and unenforceable. These sections provide, in pertinent part: 18.7 Right of First Refusal of Franchisor. If You or Your Owners propose to sell the Center (or its assets)... and a bona fide, executed written offer to purchase one or more of these interests is received, You are obligated to deliver a copy of the bona fide offer to Us along with all documents to be executed in connection with the proposed transfer. We will, for a period of thirty (30) days from the date of delivery of this offer to Us, have the right, exercisable by written notice to You, to purchase the Center (or its assets) or such ownership interest for the price and on the terms and conditions contained in the offer.... This paragraph will not apply to transfers made in accordance with Paragraph 18.3 of this Agreement [i.e., transfers to a corporation or partnership actively managed by the franchisee and in which the franchisee's ownership interest and right to control exceeds 50%]. 19. OPTION TO PURCHASE CENTER 19.1 Option. Upon the termination or expiration of this Agreement, We shall have an exclusive option, but not the obligation, exercisable for thirty (30) days to purchase the assets of the Center. For purposes of this paragraph, the term “assets” shall mean the equipment, inventory, leasehold interests and improvements and favorable rights and covenants of the Center.
Vaughn v. Digital Message Systems Corp., United States District Court, E.D. Michigan, March 10, 1997, 1997 WL 115821 (“Having found that the relationship between the parties was a franchise subject to regulation under the MFIL, the Court will next determine if Defendants complied with the MFIL notice and disclosure requirements. 2. What the MFIL Requires. The MFIL provides that: (1) A franchise shall not be sold in this state without first providing to the prospective franchisee, at least 10 business days before the execution by the prospective franchisee of any binding franchise or other agreement or at least 10 business days before the receipt of any consideration, whichever occurs first, a copy of the disclosure statement described in subsection (2), the notice described in subsection (3), and a copy of all proposed agreements relating to the sale of the franchise. M.C.L.A. § 445.1508(1).
(b) The franchisor's principal business address and the name and address of its agent in this state authorized to receive process.
(iii) Is subject to a currently effective order or ruling of the federal trade commission.
(f) The length of time the franchisor has conducted a business of the type to be operated by the franchisees for the business, and has granted franchises in other lines of business.
(i) A statement of the franchise fee charged, the proposed application of the proceeds of such fee by the franchisor, and the formula by which the amount of the fee is determined if the fee is not the same in all cases.
(k) A statement of the conditions under which the franchise agreement may be terminated or renewal refused or repurchased at the option of the franchisor.
(l) A statement as to whether, by the terms of the franchise agreement or by other device or practice, the franchisee or subfranchisor is required to purchase from the franchisor ... services, supplies, products, fixtures, or other goods relating to the franchise business, together with a description, and the terms and conditions thereof.
*8 (m) A statement as to whether, by the terms of the franchise agreement or other device or practice, the franchisee is limited in the goods or services offered by the franchisee to customers.
(n) A statement of the terms and conditions of a financing arrangement when offered directly or indirectly by the franchisor or an agent or affiliate of the franchisor.
(o) A statement of past or present practice or of intent of the franchisor to sell, assign, or discount to a third party a note, contract, or other obligation of the franchisee or subfranchisor in whole or in part.
(p) A copy of a statement, if any, of estimated or projected franchisee earnings prepared for presentation to prospective franchisees or subfranchisors, or other persons, together with a statement setting forth the data upon which the estimation or projection is based.
(r) A statement of the total number and location of franchises presently operating and the proposed total to be sold in this state.
(s) A statement as to whether franchisees or subfranchisors receive an exclusive area or territory.
(t) Other relevant information as the franchisor may desire to present.
(i) In 12–point boldface type: “The state of Michigan prohibits certain unfair provisions that are sometimes in franchise documents. If any of the following provisions are in these franchise documents, the provisions are void and cannot be enforced against you. An exact copy of the items prohibited in section 27.
(iii) In 12–point boldface type: “The fact that there is a notice of this offering on file with the attorney general does not constitute approval, recommendation, or endorsement by the attorney general.
(iv) If the franchisor is subject to the escrow provisions of section 12, a statement describing the right of the franchisee to request an escrow arrangement.
(v) A statement that any questions regarding the notice should be directed to the [Commerce] department along with the address and phone number of the department.
(d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings.
(a) Employ any device, scheme, or artifice to defraud.
(b) Make any untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading.

References: §445
 §445
 §445
 §445
 §445
 §445
 §445
 §445
 v. 
 v. 
 § 445