2023 Delaware Code › Title 6 - Commerce and Trade › Chapter 49. MOTOR VEHICLE FRANCHISING PRACTICES › § 4906. Termination, cancellation or nonrenewal of franchise — Requisites.

§ 4906. Termination, cancellation or nonrenewal of franchise — Requisites.
(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.
(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.
64 Del. Laws, c. 27, §  1;  81 Del. Laws, c. 289, § 3;