In Arkansas, the following Dealer/Franchise Termination and Non-Renewal Laws, Fraud, and Franchise Industry-Specific Laws, exist as follows:

  • Arkansas Has a Disclosure/Registration Franchise Law
  • Arkansas Has a Relationship/Termination Franchise Law
  • Arkansas Does Not Have a General Business Opportunity Franchise Law
  • Arkansas Has an Alcoholic Beverage Wholesaler/Franchise Law
  • Arkansas Has an Equipment Dealer/Franchise Law
  • Arkansas Has a Gasoline Dealer/Franchise Law
  • Arkansas Does Not Have a Marine Dealer/Franchise Law
  • Arkansas Has a Motor Vehicle Dealer/Franchise Law
  • Arkansas Does Not Have a Motorcycle Dealer/Franchise Law; covered partially by Motor
  • Vehicle Dealer/Franchise Law
  • Arkansas Does Not Have a Recreational and Power Sports Vehicle Dealer/Franchise Law; covered partially by Motor Vehicle Dealer/Franchise Law
  • Arkansas Does Have a Restaurant Liability Law

The Arkansas Franchise Practices Act” (“AFPA”), Arkansas’ franchise termination law, begins by setting forth the definitions of certain important operative terms that are used throughout the legislation. Most important of these is the definition of “good cause”, which under the AFPA means:

(A) Failure by a franchisee to comply substantially with the requirements imposed upon him by the franchisor, or sought to be imposed by the franchisor, which requirements are not discriminatory as compared with the requirements imposed on other similarly situated franchisees, either by their terms or in the manner of their enforcement; or (B) The failure by the franchisee to act in good faith and in a commercially reasonable manner in carrying out the terms of the franchise; or (C) Voluntary abandonment of the franchise; or (D) Conviction of the franchisee in a court of competent jurisdiction of an offense punishable by a term of imprisonment in excess of one (1) year, substantially related to the business conducted pursuant to the franchise; or (E) Any act by a franchisee which substantially impairs the franchisor's trademark or trade name; or (F) The institution of insolvency or bankruptcy proceedings by or against a franchisee, or any assignment or attempted assignment by a franchisee of the franchise or the assets of the franchise for the benefit of the creditors; or (G) Loss of the franchisor's or franchisee's right to occupy the premises from which the franchise business is operated; or (H) Failure of the franchisee to pay to the franchisor within ten (10) days after receipt of notice of any sums past due the franchisor and relating to the franchise.

The statute thereafter links various and different notice periods to these different situations.

Subsection (A) is notable as one that would draw the most interest in wrongful franchise termination cases: A) Failure by a franchisee to comply substantially with the requirements imposed upon him by the franchisor, or sought to be imposed by the franchisor, which requirements are not discriminatory as compared with the requirements imposed on other similarly situated franchisees, either by their terms or in the manner of their enforcement; or (B) The failure by the franchisee to act in good faith and in a commercially reasonable manner in carrying out the terms of the franchise. Another crucial definition in the AFPA is that of "Good faith" which means honesty in fact in the conduct or transaction concerned.

This concept is not one that ordinarily appears in most pieces of franchise legislation, and it is rare to have it included in a statute that has a “good cause substantial compliance” standard already included in it, which the AFPA does. In turn, the AFPA, Sec. 4-72-204, addresses Termination, Cancellation, or Failure to Renew. Structurally, the AFPA identifies as a violation of the Act for a franchisor to: (1) Terminate or cancel a franchise without good cause; or (2) Fail to renew a franchise except for good cause or except in accordance with the current policies, practices, and standards established by the franchisor which in their establishment, operation, or application are not arbitrary or capricious. That section also includes the procedural notice provisions governing terminations, cancelations or non-renewals, by prohibiting a franchisor from “directly or indirectly” terminating, canceling or failing to renew a franchise without first giving written notice to the franchisee at least ninety (90) days in advance of such action, setting forth the reasons for the termination, cancellation, or intention not to renew, and, in the case of terminations, will provide the franchisee with thirty (30) days in which to rectify any claimed deficiency. However, this section carves out certain exemptions from the need to meet these notice provisions where the reason for termination or cancellation is good cause under §4-72-202(7)(C)-(H).

[See: (C) Voluntary abandonment of the franchise; or (D) Conviction of the franchisee in a court of competent jurisdiction of an offense punishable by a term of imprisonment in excess of one (1) year, substantially related to the business conducted pursuant to the franchise; or (E) Any act by a franchisee which substantially impairs the franchisor's trademark or trade name; or (F) The institution of insolvency or bankruptcy proceedings by or against a franchisee, or any assignment or attempted assignment by a franchisee of the franchise or the assets of the franchise for the benefit of the creditors; or (G) Loss of the franchisor's or franchisee's right to occupy the premises from which the franchise business is operated; or (H) Failure of the franchisee to pay to the franchisor within ten (10) days after receipt of notice of any sums past due the franchisor and relating to the franchise.] In addition, under Section (d) of this Section, if the reason for termination, cancellation, or failure to renew is for repeated deficiencies, within a twelve-month period, giving rise to good cause under §4-72-202(7)(A) or (B) [See: (A) Failure by a franchisee to comply substantially with the requirements imposed upon him by the franchisor, or sought to be imposed by the franchisor, which requirements are not discriminatory as compared with the requirements imposed on other similarly situated franchisees, either by their terms or in the manner of their enforcement; or (B) The failure by the franchisee to act in good faith and in a commercially reasonable manner in carrying out the terms of the franchise], the franchisee will have ten (10) days to rectify the repeated deficiencies and thereby void the notice.

In Sec. 4-72-205, the AFPA addresses Transfers, Assignments, or Sales of Franchise. The Act first focuses on the franchisee, directing that it is a violation for any franchisee to transfer, assign, or sell a franchise or interest therein to another person unless the franchisee first notifies the franchisor of that intention by written notice, setting forth in the notice of intent the prospective transferee's name, address, statement of financial qualification, and business experience during the previous five (5) years. In turn, once the franchisee serves such notice, the franchisor will within sixty (60) days after receipt of the notice either approve in writing to the franchisee the sale to the proposed transferee or by written notice advise the franchisee of the unacceptability of the proposed transferee, setting forth a material reason relating to the character, financial ability, or business experience of the proposed transferee. Thereafter, if the franchisor does not reply within the specified sixty (60) days, his approval is deemed granted. Last, the AFPA states that no transfer, assignment, or sale pursuant to this section will be valid unless the transferee agrees in writing to comply with all of the requirements of the franchise then in effect. Last, the AFPA, takes a more hands-on approach to the franchise relationship by setting out and prohibiting a group of practices that it terms “Unlawful Practices of Franchisors.”

Under Sec. 4-72-206, it is a violation of the AFPA for any franchisor, through any officer, agent, or employee to engage directly or indirectly in any of the following practices: (1) To require a franchisee at time of entering into a franchise arrangement to assent to a release, assignment, novation, waiver, or estoppel which would relieve any person from liability imposed by the Act; (2) To prohibit directly or indirectly the right of free association among franchisees for any lawful purpose; (3) To require or prohibit any change in management of any franchisee unless the requirement or prohibition of change will be for reasonable cause, which cause will be stated in writing by the franchisor; (4) To restrict the partial sale of any equity or debenture issue or the transfer of any security of a franchisee or in any way prevent or attempt to prevent the transfer, sale, or issuance of shares of stock or debentures to employees, personnel of the franchisee, or heirs of the principal owner as long as basic financial requirements of the franchisor are complied with; (5) To provide any term or condition in any lease or other agreement ancillary or collateral to a franchise, which term or condition directly or indirectly violates AFPA; (6) To refuse to deal with a franchise in a commercially reasonable manner and in good faith; (7) To collect a percentage of the franchisee's sales as an advertising fee and not use these funds for the purpose of advertising the business conducted by the franchisee. With regard to the franchisee’s remedies for violations of the AFPA, Sec. 4-72-208, of the Act states that any franchisee who is harmed by a violation or violations of §4-72-207 will be entitled to recover treble damages in a civil action and, where appropriate, obtain injunctive relief in addition to reasonable attorney's fees and costs of litigation. Further defining permissible damages, the Section explains that any franchisee who is harmed by a violation of any other section of the AFPA will be entitled to recover actual damages in a civil action and, where appropriate, obtain injunctive relief in addition to reasonable attorney's fees and costs of litigation.

The Act also allows for other remedies to the State (the Attorney General and the Arkansas Securities Commissioner). Finally, under the AFPA Sec. 4-72-209, the franchisee is granted a right to repurchase upon termination of any franchise by a franchisor without good cause. In such a circumstance, the AFPA requires that the franchisor, at the franchisee's option, repurchase at franchisee's net cost, less a reasonable allowance for depreciation or obsolescence, the franchisee's inventory, supplies, equipment, and furnishings purchased by the franchisee from the franchisor or its approved sources; however, no compensation will be allowed for the personalized items which have no value to the franchisor.

In Arkansas, the following Dealer/Franchise Termination, Fraud and Non-Renewal Laws, and Franchise Industry-Specific Laws, may be identified as follows:

Arkansas Disclosure/Registration Franchise Laws Franchise Practices Act and franchisors must comply with the FTC franchise disclosure rule. Arkansas Code of 1987 Annotated, Title 4, Chap. 72, Sec. 4-72-207, 16 CFR Part 436

Arkansas Relationship/Termination Franchise Laws Arkansas Franchise Practices Act Arkansas Code of 1987 Annotated, Title 4, Chapter 72, Sec. 4-72-201 through 4-72-210

Arkansas Business Opportunity Franchise Laws No statute of general applicability Business opportunity sellers must comply with the FTC business opportunity rule

Arkansas Alcoholic Beverage Wholesaler/Franchise Laws Arkansas beer law; Arkansas beer price discrimination law; Arkansas liquor, wine, and beer distribution law Ark. Code Ann. Title 3, Chap. 5, Subchapter 11 Ark. Code Ann. Title 3, Chap. 2, Subchapter 4

Arkansas Equipment Dealer/Franchise Laws Arkansas farm implements, machinery, utility, and industrial equipment Dealer/Franchise law. Ark. Code Ann. Title 4, Chap. 72, Subchapter 3

Arkansas Gasoline Dealer/Franchise Laws Arkansas .Arkansas gasoline Dealer/Franchise law Ark. Code Ann. Title 4, Chap. 72, Subchapters 4 and 5

Arkansas Marine Dealer/Franchise Laws No Arkansas-specific franchise law in this industry niche.

Arkansas Motor Vehicle Dealer/Franchise Laws Arkansas Motor Vehicle Commission Act Ark. Code Ann. Title 23, Subtitle 4, Chap. 112

Arkansas Motorcycle Dealer/Franchise Laws No Arkansas-specific franchise law in this industry niche Covered in part by motor vehicle Dealer/Franchise law for all-terrain vehicles

Arkansas Recreational and Powersports Vehicle Dealer/Franchise Laws No Arkansas-specific franchise law in this industry niche Covered in part to motor vehicle Dealer/Franchise law for all-terrain vehicles

Arkansas Restaurants Arkansas restaurants liability law Ark. Code Ann. Title 4, Chap. 72, Subchapter 6

Several Arkansas federal and state court decisions addressing dealer   and franchise termination and non-renewal issues have been excerpted   below. For more information regarding the specific reasoning, ultimate   determination, or implications of any franchise termination or   non-renewal case listed below, please contact Jeff Goldstein.

Larry Hobbs Farm Equipment, Inc. v. CNH America,   United States District Court, E.D. Arkansas, Eastern Division, April   17, 2009 (“Pursuant to Rule 6–8 of the Rules of the Supreme Court of the   State of Arkansas, this Court certified to the Arkansas Supreme Court   three questions of statutory construction: (1) whether the market   withdrawal of a product or of a trademark and trade name for the product   constitutes “good cause” to terminate a franchise under Ark.Code Ann. §   4–72–204(a)(1); (2) whether liability under Ark.Code Ann. §   4–72–310(b)(4) is created when a manufacturer terminates, cancels, fails   to renew, or substantially changes the competitive circumstances of the   dealership agreement based on re-branding of the product or ceasing to   use a particular trade name or trademark for a product while selling it   under a different trade name or trademark; and (3) whether the sole   remedies for a violation of the Arkansas Farm Equipment Retailer   Franchise Protection Act are (a) the requirement that the manufacturer   repurchase inventory for a termination without good cause and (b)   damages, costs, and attorneys' fees resulting from the failure to   repurchase as provided in Ark.Code Ann. § 4–72–309, or whether other   remedies are also available. The Arkansas Supreme Court answered these   questions in a January 22, 2009 opinion. As to the first question, the   Arkansas Supreme Court held that the market withdrawal of a product or   of a trademark and a trade name for the product does not constitute   “good cause” to terminate a franchise under Ark.Code Ann. §   4–72–204(a)(1). As to the second question, the Arkansas Supreme Court   held that no liability under Ark.Code Ann. § 4–72–310(b)(4) is created   when a manufacturer terminates, cancels, fails to renew, or   substantially changes the competitive circumstances of the dealership   agreement based on re-branding of the product or ceasing to use a   particular trade name or trademark for a product while selling it under a   different trade name or trademark. Finally, as to the third question,   the Arkansas Supreme Court held that other remedies are available under   the Arkansas Farm Equipment Retailer Franchise Protection Act, but that   those are limited to remedies other than money damages, such as   injunctive relief and declaratory relief.”)

Volvo Trademark Holding Aktiebolaget v. Clark Machinery Co., United States Court of Appeals, Fourth Circuit, December 20, 2007, 510   F.3d 474 (Volvo next contends that the district court erred in granting   summary judgment to Clark on the basis of its conclusion that Volvo had   terminated Clark's Dealer Agreement without good cause. As a general   proposition, we review de novo a district court's award of summary   judgment, viewing the facts in the light most favorable to the   non-moving party. See Lee v. York County Sch. Div., 484 F.3d 687, 693   (4th Cir.2007). An award of summary judgment may be appropriately made   only “if the pleadings, depositions, answers to interrogatories, and   admissions on file, together with the affidavits, if any, show that   there is no genuine issue as to *482 any material fact and that the   moving party is entitled to summary judgment as a matter of law.”   Fed.R.Civ.P. 56(c). The Arkansas Act includes a list of eight   occurrences that constitute “good cause” for termination or cancellation   of a franchise. See Ark.Code Ann. § 4–72–202 (West 2007).5 The district   court held, adopting Clark's position, that this list constituted the   exclusive means by which a franchisor may terminate a franchise for good   cause under the Arkansas Act. Volvo acknowledges that it did not   terminate Clark's Dealer Agreement for any of the specific reasons   provided for in the Arkansas Act, but contends that those eight   occurrences are not an exclusive list of what constitutes good cause for   termination of a franchise. Appurtenant to this contention, Volvo   maintains that its reasons for termination, i.e., “Volvoization” and   “Dealer Rationalization,” also constitute good cause for a franchise   termination under the Arkansas Act. 8 As the district court aptly   recognized, Volvo's contention presents an issue of statutory   construction, and a federal court sitting in diversity is obliged to   apply state law principles to resolve such a question, utilizing such   principles as enunciated and applied by the state's highest court. See   Volvo Trademark, 416 F.Supp.2d at 410 (citing Cooper Distrib. Co., Inc.   v. Amana Refrigeration, Inc., 63 F.3d 262, 274 (3d Cir.1995)). The   Arkansas Supreme Court has not resolved the statutory issue raised by   Volvo, and we are therefore obliged to interpret the Arkansas Act by   applying the principles of statutory construction that would guide an   Arkansas court in making such a decision. See CTI/DC, Inc. v. Selective   Ins. Co. of Am., 392 F.3d 114, 118 (4th Cir.2004). 910 The district   court made a thorough explanation of its ruling on this issue. According   to the applicable Arkansas legal principles, if a statute is clear, it   is to be given its plain meaning, and courts are not to search for any   legislative intent. See Volvo Trademark, 416 F.Supp.2d at 411 (citing   Hinchey v. Thomasson, 292 Ark. 1, 727 S.W.2d 836 (1987)). Arkansas also   subscribes to the legal principle of expressio unius est exclusio   alterius, meaning “ ‘that the express designation of one thing may   properly be construed to mean the exclusion of another.’ ” Id. (quoting   Gazaway v. Greene County Equalization Bd., 314 Ark. 569, 864 S.W.2d 233,   236 (1993)). Applying these controlling principles to the Arkansas Act,   the district court concluded that good cause for termination of a   franchise under the Act is limited to the eight occurrences specifically   enumerated therein. See Volvo Trademark, 416 F.Supp.2d at 412. The   court deemed the Arkansas Act to be clear on its face, and determined   that the express designation of those eight occurrences precluded any   other circumstance from constituting good cause for a franchise   termination. Id. at 411. As a result, the court concluded that the   Arkansas Supreme Court would have held that the “circumstances   constituting ‘good cause’ for termination under the [Arkansas Act] are   limited to those expressly designated in” the Act and, because Volvo's   actions did not fall under one of the enumerated occurrences, it had   terminated Clark's Dealer Agreement in violation of the Arkansas Act.   Id. at 412, 416–17.”)

Capital Equipment, Inc. v. CNH America, LLC,   United States District Court, E.D. Arkansas, Western Division, April   28, 2006 (“Capital alleges that the following conduct by NHC violated   the Arkansas Franchise Practices Act, Ark.Code Ann. § 4-72-201 et seq.   (2001)(“AFPA”) in the following ways: (1) by refusing to deal with   Capital in a commercially reasonable manner and in good faith; (2) by   canceling Capital's dealership without good cause; (3) by perpetrating   fraud and misrepresentation upon Capital; and (4) by failing to   repurchase Capital's inventory upon termination. NHC urges the Court to   find in its favor on each of Capital's theory of recovery under the   AFPA. Because Capital has come forward with evidence which, if believed,   will permit a jury finding in its favor, the Court denies summary   judgment as to AFPA's claims. The Court does find it necessary, however,   to discuss two legal issues raised by NHC's theories for recovery. De   Facto or Constructive Termination NHC argues that Capital cannot prevail   on its theory that it was terminated without good cause in violation of   the AFPA because it voluntarily resigned its dealership and was not   terminated. Capital urges this Court to reject this theory, to predict   that Arkansas courts would recognize constructive or de facto   terminations as violating the AFPA's good cause requirement for   terminating a franchisor, and to find the evidence sufficient to permit   such a finding. It is undisputed that Capital on October 9, 2001, wrote a   letter to NHC advising that it had suffered “enormous financial   hardships as a result of New Holland Construction” and asserting that   the financial difficulties were the result of “being overstocked and   unable to move the NHC products.” (Exh. R to Capital's Response). In the   same letter, Capital advised that it was resigning the NHC line but   wished to continue selling the “skids [skid steer loaders] and TLB's.”   NHC contends that Capital abandoned the line.5 Capital contends that   NHC's actions caused the financial ruin of its company and should be   considered a de facto termination. No Arkansas case addresses the issue   of whether a franchisee may pursue an action for termination when the   termination is constructive rather than actual. Other jurisdictions,   construing similar state franchise protection acts, have recognized de   facto or constructive termination claims.6The Second Circuit, in   electing to do so, reasoned that “[i]f the protections of the   Connecticut legislature afforded to franchisees were brought into play   only by a formal termination, those protections would quickly become   illusory. We think it reasonable therefore to believe it was the   legislature's aim to have the umbrella of the Acts's protection cover   constructive as well as formal termination. To hold otherwise would   allow franchisors to accomplish *960 indirectly that which they are   prohibited from doing directly.” Petereit v. S.B. Thomas, Inc., 63 F.3d   1169, 1182 (2nd Cir.1995). While the Court might predict that Arkansas   courts, if confronted with the issue, would conclude that a franchisor   may not indirectly bring about the termination of its franchisee, it   would first like to consider the issue in terms of the big picture.   Under what circumstances would a franchisor's actions rise to the level   of constructive or de facto termination? How would such protections be   reconciled with the AFPA's other provisions? The Petereit court, in   considering how to determine when a franchisee had been constructively   terminated, had this to say:... it appears that something greater than a   de minimis loss of revenue-and less than the stark scenario of driving a   franchisee out of business-must be shown in order to justify a finding   of constructive termination. We think such may be found when a   franchisor's actions result in a substantial decline in franchisee net   income. Such analysis will be strictly financial, except in close cases,   where nonfinancial factors may have some bearing. Whether a decline in   net income is substantial will necessarily depend on the particular   facts and must be determined on a case-by-case basis. Petereit, 63 F.3d   at 1183 (emphasis in original). The parties have focused their arguments   more on whether Arkansas courts would recognize a constructive or de   facto termination. But, even if this Court should conclude that the   Arkansas courts would recognize constructive termination, many questions   remain-for example, how would such a theory work within the AFPA's   framework; what would the contours of such a claim be; what would   Capital be required to prove to prevail; and what would additional   remedies would arise, if any, by virtue of proving a constructive   termination? The Court invites additional briefing from the parties on   these issues. In particular, the Court is curious to know whether there   is authority for the proposition that before a franchisor may be held   liable for a constructive termination it must have committed acts which   could be found by the jury to constitute violations of the AFPA   independently of the alleged de facto termination. The AFPA permits   recovery for actual damages for a franchisor's refusal “to deal with a   franchise in a commercially reasonable manner and in good faith.”   Ark.Code Ann. § 4-72-206. The Arkansas Supreme Court's most recent   discussion of the AFPA suggests that many actions taken by a   franchisor-even if such actions are not a violation of a franchisor's   contractual obligations-may be found by the jury to be commercially   unreasonable and therefore in violation of the AFPA. Miller Brewing Co.   v. Roleson, supra. Capital has alleged numerous other acts which it   contends violated the AFPA. Given the breadth of the AFPA, should it not   be the law to require Capital to prevail on at least one of its   non-termination claims under the AFPA before permitting a finding of   constructive termination? If this is a correct interpretation of the   law, then a constructive termination claim could not arise absent an   independent violation of the AFPA. As to what Capital would be required   in order to prevail, should we look, by analogy, to constructive   discharge claims in the context of employment discrimination? If so,   should not Capital be required to prove either that NHC acted with the   intent of forcing Capital to resign its dealership or that Capital's   resignation was a reasonably *961 foreseeable result of NHC's actions,   AND that a reasonable dealer in Capital's situation would have deemed   resignation the only reasonable alternative. See, e.g., 8TH CIR. CIVIL   JURY INSTRUCTIONS 5.93 (2005). Finally, since Capital is entitled to   recover actual damages for any actions deemed by the jury to be   commercially unreasonable, if such actions caused Capital's demise and   can form the basis for a lost profits recovery as Capital's “actual   damages” then what does a claim for constructive termination add to the   mix? In other words, under what circumstances, if any, may Capital   recover the lost profits measure of damages as “actual damages” under   the AFPA, despite the fact that it resigned its NHC dealership? Is it   necessary to demonstrate a constructive termination in order to recover   lost profits, assuming Capital prevails on its other theories (excluding   the fraud based theories) that NHC violated the AFPA? If not, is it not   arguably the case that the only claim for relief under the AFPA that   appears to be contingent on Capital's ability to prove a constructive   termination under the AFPA is the claim for repurchase of its   inventory?7 Finally, since Capital only resigned the heavy equipment   portion of the line and intended and desired to continue selling skid   steer loaders and TLB's (and allegedly was told it could do so as it did   prior to taking on the heavy construction line at NHC's suggestion),   was it not arguably “terminated” from continuing to carry that line?   Capital will apparently argue that NHC's “all-or-none” approach was   itself an AFPA violation, independently of the constructive termination   issue. As the above discussion shows, whether to recognize a claim for   constructive termination is not a decision that can or should be made in   a vacuum, i.e., without due consideration given to the AFPA as a whole.   The Court requests additional consideration and briefing from the   parties on these issues.)

Heating & Air Specialists, Inc. v. Jones,   United States Court of Appeals, Eighth Circuit, June 7, 1999, 180 F.3d   923 (“The AFPA explicitly prohibits a franchisor from canceling a   franchise without good cause. The provision contained in the parties'   dealer agreements that permitted either of them to terminate their   relationship “without cause” is therefore invalid under the AFPA.   Nevertheless, under the particular facts of this case the district   court's error was harmless. We find that Lennox had good cause to cancel   the franchise, and therefore, the AFPA affords A/C no protection. The   AFPA enumerates several specific examples of “good cause,” including,   “Failure of the franchisee to pay to the franchisor within ten (10) days   after receipt of notice of any sums past due the franchisor and   relating to the franchise.”Ark.Code Ann. § 4–72–202(7)(H). In canceling   A/C's franchise, Lennox provided A/C with a notice stating that $198,627   was past due on A/C's account, and that A/C had “ten days in which to   rectify the deficiency” in order to prevent termination. Although the   parties disputed the precise amount of the deficiency, the   uncontroverted evidence adduced at trial shows that on the date of the   termination notice A/C's account was past due. A/C further admits that   it did not repay any part of the amount owed within the ten-day grace   period provided. Lennox therefore had good cause to terminate the   franchise, and A/C's claims under the AFPA fail as a matter of law. A/C   attempts to divert attention from its failure to pay Lennox in a timely   fashion by arguing that Lennox's breach of their agreements artificially   threw A/C into default. A/C specifically contends that because Lennox   reneged on its promise to provide A/C with start-up costs, co-op   payments and fall stocking terms, it was unable to keep its account   current. These arguments are unpersuasive. The evidence shows that the   amount past due on A/C's account far exceeds the amount of any start-up   or co-op payments it was entitled to receive,6 and therefore, any   failure on the part of Lennox to honor these promises cannot account for   the deficiency. Furthermore, even if Lennox had provided A/C with fall   stocking terms, those terms would have required repayment in May, June   and July 1996. Lennox did not terminate A/C's franchise until August 9,   1996, after A/C's payments would have been due in any event. Lennox's   failure to provide promised deferred payment terms thus could not have   caused the default that existed on the date of termination. For these   reasons, Lennox's breach of its agreements with A/C has no effect on the   Court's determination that Lennox had good cause to terminate the   franchise.”)

Heating & Air Specialists, Inc. v. Jones,   United States Court of Appeals, Eighth Circuit, June 7, 1999, 180 F.3d   923 (“Lennox's Counterclaim -- A/C and Jones appeal the district court's   charge to the jury regarding Lennox's counterclaim, which stated, “In   connection with Lennox's claim against A/C, there is a dispute as to the   amount of the purchase price owed to Lennox and unpaid by A/C. The   burden is on Lennox to prove the amount of the purchase price unpaid.”   A/C argues that the district court additionally should have instructed   the jury that, “A party is relieved of the duty to perform a contract if   the other party to the contract prevented him from performing.” The   crux of A/C's complaint is that in failing to so instruct the jury, the   district court deprived A/C of its ability to argue that Lennox's   failure to provide A/C with promised start-up funds, co-op payments and   deferred payment terms caused A/C to breach its obligation to pay Lennox   for the goods it received. As argued above, Lennox's failure to perform   its obligations under the agreement logically could not have prevented   A/C from paying the entire amount past due on its account. The theory   upon which A/C predicated its jury instruction request is thus   inherently flawed. Furthermore, A/C's requested instruction misstates   the law applicable to the parties' transaction. A/C argues that the   Restatement (Second) of Contracts supports its request. The relevant   provision states: [I]t is a condition of each party's remaining duties   to render performances to be exchanged under an exchange of promises   that there be no uncured material failure by the other party to render   any such performance due at an earlier time. Restatement (Second) of   Contracts § 237 (1979). Based on this provision, A/C contends that   Lennox's failure to fulfill its obligations relieved A/C of its duty to   pay for the Lennox products that it received and accepted. A/C's   assumption that the common law of contracts applies to Lennox's   counterclaim is in error. Although the parties' franchise agreement is a   mixed contract for the sale of goods and services, the transaction at   issue is fundamentally an exchange of goods. The Uniform Commercial Code   (U.C.C.), which both Arkansas and Texas have adopted in relevant part,   governs such transactions. See U.C.C. § 2–102;Ark.Code Ann. § 4–2–102;   Tex.Bus. & Com.Code Ann. § 2.102. Under the U.C.C., A/C became   obligated to pay for the goods when it accepted them. See U.C.C. §§   2–607(a); Ark.Code Ann. § 4–2–607(a); Tex.Bus. & Com.Code Ann. §   2.607(a) (“The buyer must pay at the contract rate for any goods   accepted.”). The U.C.C. contains no provision relieving a buyer of this   obligation because of a breach that is unrelated to the goods or to   their shipment. Plaintiff's theory is thus wholly unsupported by the law   governing the parties' exchange of goods. The district court's decision   to deny the requested jury instruction is accordingly affirmed.”)

Heating & Air Specialists, Inc. v. Jones,   United States Court of Appeals, Eighth Circuit, June 7, 1999, 180 F.3d   923 (“Tulsa Breach of Contract -- Lennox cross-appeals from the district   court's denial of its motion for judgment as a matter of law with   regard to A/C's breach of contract claim concerning the Tulsa operation.   Lennox argues that A/C's claim fails as a matter of law because its   overdue account gave Lennox a statutory right to cancel their agreement.   When we review the denial of a motion for judgment as a matter of law,   we must: (1) resolve direct factual conflicts in favor of the nonmovant,   (2) assume as true all facts supporting the nonmovant which the   evidence tended to prove, (3) give the nonmovant the benefit of all   reasonable inferences, and (4) affirm the denial of the motion if the   evidence so viewed would allow reasonable jurors to differ as to the   conclusions that could be drawn. See Hastings v. Boston Mutual Life Ins.   Co., 975 F.2d 506, 509 (8th Cir.1992). Nevertheless, we must not give   the nonmoving party “the benefit of unreasonable inferences, or those at   war with the undisputed facts.” Larson v. Miller, 76 F.3d 1446, 1452   (8th Cir.1996) (citing City of Omaha Employees Betterment Ass'n v. City   of Omaha, 883 F.2d 650, 651 (8th Cir.1989)). “A mere scintilla of   evidence is inadequate to support a verdict, and judgment as a matter of   law is proper when the record contains *933 no proof beyond speculation   to support the verdict.” Id. (citation omitted). We conclude from the   overwhelming evidence offered at trial that A/C's account with Lennox   had fallen seriously behind on July 3, 1996, the date upon which Lennox   first notified Jones that it would no longer sell products to him for   marketing in the Tulsa territory. Lennox submitted letters, invoices,   and business records demonstrating that A/C's account was more than   $200,000 in arrears from February 1996 through June 1996. On June 20,   1996, Lennox's records showed an amount past due of $211,389. Although   the parties disputed the amount that A/C owed Lennox at trial, A/C's own   exhibit shows an amount past due in July 1996 of over $114,000. A/C   does not contest this evidence, and thus, no reasonable jury could find   that A/C's account was current on the date that Lennox withdrew   permission for the sale of its products in Tulsa. 11Under the U.C.C. as   enacted under the laws of both Arkansas and Texas, “Where the buyer   wrongfully ... fails to make payment due on or before delivery ... and,   if the breach is of the whole contract ... then also with respect to the   whole undelivered balance, the aggrieved seller may ... cancel.”   Ark.Code Ann. § 4–2–703(f); Texas Bus. & Com.Code Ann. § 2.703. In   Frigiking, Inc. v. Century Tire & Sales Co., 452 F.Supp. 935, 938   (N.D.Tex.1978), the court found under the Texas version of this   provision that a corporation was justified in canceling the   distributorship agreements with its dealer because of its “chronic large   overdue balances.” The court concluded that the dealer had breached the   agreements so as to impair the whole contract. See id. In Camfield   Tires, Inc. v. Michelin Tire Corp., 719 F.2d 1361, 1366–67 (8th   Cir.1983), we cited Frigikingwith approval and held that a tire company   justifiably canceled its dealership agreement because of the dealer's   chronic failure to make timely payments. We accordingly affirmed the   district court's summary judgment dismissal of the dealer's claim for   wrongful termination of the agreement. Both Frigiking and Camfield Tires   are analogous to the case at bar, and therefore, Lennox had a statutory   right to cancel any contract with A/C to deliver goods for resale in   Tulsa. A/C and Jones attempt to distinguish Frigiking and Camfield Tires   on the ground that Lennox failed to notify A/C that its past due   account was a reason for its decision to terminate the Tulsa operation.   Instead, Lennox stated verbally that A/C was not a part of the “core   dealership” in Tulsa, and further stated in writing that Tulsa did not   appear as an authorized location on the parties' dealership agreement.   A/C's argument appears to rest on the assumption that Lennox had an   obligation to provide notice to A/C along with an explanation of all of   its reasons for cancellation. A/C cites no authority for this   proposition, and it is not supported by the U.C.C. The U.C.C. draws a   distinction between “termination” of a contract for the sale of goods   and “cancellation” of the contract. See U.C.C. § 2.106. Although the   U.C.C. requires a party to give reasonable notice upon termination of a   contract, see U.C.C. § 2.309, no such notice is required in order to   cancel it for failure to pay, see U.C.C. § 2.703. InInternational   Therapeutics, Inc. v. McGraw–Edison Co., 721 F.2d 488, 492 (5th   Cir.1983), the court explained this distinction: “The reason is obvious;   an aggrieved seller dealing with a buyer who is in breach of their   contract should not normally be obliged to put the delinquent buyer on   notice before terminating future relations.” Lennox therefore had no   obligation to provide A/C with notification of its reasons for canceling   the agreement permitting A/C to purchase products for resale in Tulsa.   Thus, even assuming that Lennox agreed that the Tulsa operation could   continue for a period of years, Lennox's cancellation of that agreement   was proper and A/C's breach of contract claim with regard to Tulsa fails   as a matter of law.”)

Dr. Pepper Bottling Co. of Paragould v. Frantz,   Supreme Court of Arkansas, November 23, 1992, 311 Ark. 136, 842 S.W.2d   37 (“The Arkansas Franchise Practices Act [Act 355 of 1977, Ark.Code   Ann. §§ 4–72–201—210 (1987) provides remedies for persons whose rights   as franchisees have been terminated without good cause. A franchise is   defined by the act as a written or oral agreement for a definite or   indefinite period, in which a person grants to another person a license   to use a trade name, trademark, service mark, or related characteristic   within an exclusive or nonexclusive territory, or to sell or distribute   goods or services within an exclusive or nonexclusive territory, at   wholesale, retail, by lease agreement, or otherwise. Ark.Code Ann. §   4–72–202(1) … The Circuit Court Erred In Finding That There Was A   Legally Sufficient Evidentiary Basis For The Jury's Finding That Frantz   Was Terminated Without Good Cause, Without Statutory Notice, And Without   An Opportunity To Cure His Deficiencies -- Dr. Pepper contends there is   no substantial evidence that Dr. Pepper terminated Frantz without good   cause. “Good cause” is defined under the Franchise Act as including the   failure by the franchisee to comply substantially with the requirements   imposed under the agreement. Dr. Pepper submits it produced overwhelming   evidence of good cause to terminate. But that issue was clearly one for   the jury, considering there was evidence from which the jury could   readily find that termination was attributable to Dr. Pepper having   acquired 7–Up Bottling Company rather than from the actions of Don   Frantz.”)

Miller Brewing Co. v. Ed Roleson, Jr., Inc., Supreme Court of Arkansas, January 19, 2006, 365 Ark. 382, 23 S.W.3d   806 (“I. Violation of Franchise Practices Act -- We first consider   Miller's point on appeal involving the jury's finding that Miller   violated the Arkansas Franchise Practices Act (“Franchise Act” or   “Act”).3 Miller asserts that the trial court erred in submitting this   claim to the jury for two reasons: (1) Roleson had no express or implied   right under the Franchise Act or the franchise agreement to acquire   additional brands or territories; and (2) Roleson's claim under the   Franchise Act is preempted by the Arkansas Beer Wholesaler Statute,   specifically, Ark.Code Ann. § 3–5–1108(a) (Repl.1996). The statutory   provision of the Franchise Act at issue is set forth in Ark.Code Ann. §   4–72–206 (Repl.2001), which states in relevant part as follows: It shall   be a violation of this subchapter for any franchisor, through any   officer, agent, or employee to engage directly or indirectly in any of   the following practices: ... (6) To refuse to deal with a franchise in a   commercially reasonable manner and in good faith[.] Ark.Code Ann. §   4–72–206 (Repl.2001). “Franchise” is defined by the Act as a written or   oral agreement for a definite or indefinite period in which a person   grants to another person a license to use a trade name, trademark,   service mark, or related characteristic within an exclusive or   nonexclusive territory or to sell or distribute goods or services within   an exclusive or nonexclusive territory at wholesale or retail, by lease   agreement, or otherwise. Ark.Code Ann. § 4–72–202(1)(A) (Repl.2001).   “Good faith” means “ honesty in fact in the conduct or transaction   concerned.” Ark.Code Ann. § 4–72–202(8) (Repl.2001). The Franchise Act   does not define “commercially reasonable manner.” Whether Miller dealt   with the franchise in a commercially reasonable manner and in good faith   is a fact question for the jury. SeeMercantile Bank v. B & H   Associated, Inc., 330 Ark. 315, 320, 954 S.W.2d 226, 229 (1997). The   question before us is whether, examining the evidence and all reasonable   inferences arising therefrom in the light most favorable to Roleson,   there was substantial evidence to support the jury's verdict that Miller   did not deal with the franchise in a commercially reasonable manner and   in good faith. Id. We hold that there was substantial evidence to   support the jury's finding that Miller refused to deal with its   franchise with Roleson in a commercially reasonable manner and in good   faith. Miller argues that there was no evidence to support this claim   because the claim is not based on Roleson's rights under his existing   contract with Miller, but on rights Roleson might have to enter into a   future contract to purchase Campbell's business. Relying on the   definition of franchise as “a written or oral agreement,” Miller argues   that, because the Distributor Agreement between Miller and Roleson   conferred no rights upon Roleson to enter into new contracts for other   franchises covering other brands, there was no “franchise” with regard   to these other brands. Miller claims that, because Roleson had no   franchise agreement with Miller with respect to Roleson's ownership of   other brands and territories not specifically listed in the Distributor   Agreement, Roleson could not make a claim of a violation of the   Franchise Act with regard to such brands. We disagree. Roleson is not   claiming that Miller violated some non-existent franchise agreement   between Miller and Roleson regarding other brands, but that Miller   refused to deal with the existing franchise between Miller and Roleson   in a commercially reasonable manner and in good faith. According to   Roleson, Miller adopted and executed a plan to eliminate Roleson as a   distributor and applied pressure to other distributors—including   Campbell, White River, and Mountain Home—in furtherance of that plan.   While Miller's actions may not have caused Roleson to lose the brands   and territories listed in the existing Distributor Agreement, Roleson   claims that Miller's actions prevented it from growing its business and   increasing its revenues, which was critical to its ability to remain   competitive in the changing beer market. While we have not had an   opportunity to interpret this provision of the Franchise Act, an opinion   by the Eighth Circuit Court of Appeals offers some guidance. In   Southern Implement, Inc. v. Deere & Co., 122 F.3d 503 (8th   Cir.1997), a franchisee of John Deere equipment sued its franchisor,   alleging that the franchisor permitted an unauthorized dealer to sell   within the franchisee's assigned territory. Because the contract did not   give the franchisee an exclusive right to sell Deere products in its   “area of responsibility [AOR]” and because the contract did not require   the franchisor to police a franchisee's AOR or prevent other dealers   from establishing facilities in the AOR, the trial court granted summary   judgment in favor of the franchisor on the Franchise Act claim. Id. The   Eighth Circuit reversed, holding that—in spite of the lack of a   specific contractual obligation—a jury could have found that the   franchisor had an obligation to investigate and prevent others from   operating an unauthorized facility. The court held that the failure to   do so in that case could constitute bad faith. Id. While the Distributor   Agreement between Miller and Roleson did not specifically address   Roleson's acquisition of additional brands and territories, the law   requires the parties to deal with the franchise in a commercially   reasonable manner. Ark.Code Ann. § 4–72–202(7) and 206(6). Without   enumerating all of a franchisor's acts which might constitute a failure   to deal with a franchise in a “commercially reasonable manner,” we hold   that a franchisor's attempt to force a franchisee out of business may   constitute a refusal to deal with a franchise in a commercially   reasonable manner and in good faith under Ark.Code Ann. § 4–72–206(6).   We now review whether there is substantial evidence to support the   jury's verdict that Miller violated this provision of the Franchise Act.   Roleson presented evidence at trial of the White Paper, which set forth   Miller's plan to eliminate Roleson as a distributor. Testimony at trial   indicated that this plan was not disclosed to Roleson. Larry Holcomb,   Roleson's general manager, testified that he and Mr. Roleson found out   from a Miller representative at a national sales meeting that Miller had   thwarted Roleson's efforts to purchase Campbell in furtherance of that   plan. The Miller representative stated that Miller simply “wanted to   grow the size of [certain] Miller distributors” and that Roleson was not   one of those distributors. The Miller representative said that Roleson   was not “in Miller Brewing Company's long term plans.” Furthermore, in a   courtesy call to Mr. Roleson to let him know *47 that White River had   made a deal to purchase Campbell and to make an offer to purchase   Roleson, Mr. O'Conner testified that he told Roleson he should sell   before he died of a heart attack fighting Miller. The jury could have   inferred from this testimony that Mr. O'Conner knew of Miller's plan to   force Roleson out of business. There was also evidence in the testimony   of Jim Young, Miller's representative, Jan Bratcher, White River's   president, and Ed Roleson from which the jury could have found that the   sale of Campbell to White River was executed in furtherance of Miller's   overall plan to eliminate Roleson as a distributor. Mr. Bratcher stated   that the plan to buy Campbell's business came unexpectedly from Mr.   O'Conner, and that he advised Mr. O'Conner that it was a bad deal. Mr.   O'Conner's decision to buy Campbell and his subsequent meeting with Mr.   Campbell occurred within days of Mr. O'Conner's meeting with Mr. Young.   Considering the evidence and all reasonable inferences arising therefrom   in the light most favorable to Roleson, as we must under our standard   of review, we hold that there was substantial evidence to support the   jury's verdict that Miller “refuse[d] to deal with a franchise in a   commercially reasonable manner and in good faith” in violation of   Ark.Code Ann. § 4–72–206(6)”)

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