Source: https://mcdonaldhopkins.com/insights/alerts/2013/02/22/franchise-alert-terminating-a-franchise-agreement-in-ohio
Timestamp: 2019-04-25 04:09:52+00:00

Document:
In addition to the specific provisions of the franchise agreement, the franchisor must also be aware of applicable state laws that set forth specific requirements for the termination of a franchise. In 19 states, Puerto Rico and the Virgin Islands there are specific laws that govern the termination of a franchise relationship by the franchisor.1 Most franchise termination laws require the franchisor to have “good cause” to terminate the franchisee. What constitutes good cause varies from state to state. Accordingly, the franchisor needs to determine which state laws apply and what each law requires.
Ohio does not have a statute of general applicability to the termination of a franchise agreement by a franchisor. Ohio does, however, have certain specific statutes governing termination of wine and beer distributorships and new motor vehicle dealerships.
The franchisor tortiously interfered with the franchisee’s business relationships.
Based on the foregoing, a franchisor must proceed with caution when contemplating the termination of a franchise. In certain circumstances, a franchisor may determine that the benefits of avoiding termination (continued payment of royalties and advertising fees, protecting the goodwill of the brand, and maintaining franchisee and employee moral) outweigh its desire to terminate a franchisee.
These are just some of the issues that should be addressed when a franchisor is considering whether or not to terminate a franchise in the State of Ohio. McDonald Hopkins' team of franchise, commercial litigation, business restructuring, intellectual property, and real estate attorneys are prepared to provide counsel to both franchisors and franchisees.
1 The 19 states are Arkansas, California, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, Rhode Island, Virginia, Washington and Wisconsin.
2 See Ohio Revised Code § 1333.85.
3 See Ohio Revised Code § 1333.85 (B)(4) and (D) Beverage Distributors, Inc. v. Miller Brewing Company, 2011 U.S. Dist. LEXIS 30583 (S.D. Ohio Mar. 22, 2011); The Bellas Company v. Pabst Brewing Co., 2011 U.S. Dist. LEXIS 24781 (S.D. Ohio Mar. 11, 2011), (analysis of a successor manufacturer’s obligations and right to terminate a franchise under The Ohio Alcoholic Beverages Act).
4 On June 10, 2010, Governor Strickland signed Ohio Senate Bill 204, which received unanimous approval from both the Ohio Senate and Ohio House of Representatives. The amendments became effective on September 10, 2010.
5 See General Motors Corp. v. Monte Zinn Chevrolet Co., (2000), 136 Ohio App.3d 157, 164; and Brown Motor Sales Co. v. Hyundai Motor America, 2011 WL 4541304 (10th District Court of Appeals, Sept. 30, 2011).
6 See General Motors Corp. v. Monte Zinn Chevrolet Co., (2000), 136 Ohio App.3d 157, 165.
7 See Ohio Revised Code § 4517.54(B).
8 See Ohio Revised Code § 4517.65(C).

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