N.Y. General Business Law § 199-i: Dealers' rights to transfer, assign or dispose of the franchise upon notice to distributor

§ 199-i. Dealers' rights to transfer, assign or dispose of the

franchise upon notice to distributor. 1. Every franchise agreement and

any other lease or agreement in connection therewith between a

distributor and a dealer shall be transferable or assignable at the

option of the dealer provided the distributor consents to such

assignment, which consent shall not be unreasonably withheld. A proposed

assignee shall meet the reasonable standards normally required by the

distributor or its prospective dealers, including, but not limited to:

(a) experience and qualifications; (b) credit rating; (c) financial

resources; (d) moral character; and (e) operation by the assignee of not

more than two dealerships with the distributor from whom consent is

requested. Prior to any transfer or assignment, the dealer shall notify

the distributor of an intention to transfer or assign such franchise by

written notice of intent setting forth the prospective assignee's name,

address, statement of financial qualification and business experience

during the previous five years. The distributor shall, within sixty days

after receipt of such notice of intent, give written notice to the

dealer of its consent or objection to such transfer or assignment. If

the distributor objects to the transfer or assignment, it shall state

its reasons therefor. If the distributor does not reply within the

specified sixty days, approval of the transfer or assignment shall be

deemed granted. Such transfer or assignment shall not be valid until

the assignee agrees in writing to comply with all the requirements of

the franchise and any other lease or agreement in connection therewith

then in effect.

A dealer may not exercise the right of assignment or transfer after he

has been notified of termination or non-renewal of the franchise

agreement for cause as described in the federal petroleum marketing

practices act unless the notice of intent to assign or transfer under

this section has been delivered to the distributor prior to the dealer's

receipt of such notice of termination or non-renewal.

2. (a) Upon the death of the dealer, the franchise and any lease or

other agreement in connection therewith shall devolve to the designated

successor of such dealer, provided that prior to his death, the dealer

has notified the distributor in writing of the name, address and

relationship of the designated successor and the designated successor

meets the qualifications specified in subdivision one of this section at

the time of the dealer's death. For the purpose of this subdivision, the

term "designated successor" shall include one or more of the following

persons: (i) the surviving spouse; (ii) the adult child or children of

the deceased dealer; and (iii) any adult next-of-kin of the deceased

dealer who has actively participated in the dealership for at least

twelve months preceding the dealer's death. The twelve month period need

not be continuous.

Upon the death of the dealer, the designated successor shall promptly

assume operation of the franchise and shall be responsible for the

operation of the franchise in accordance with the terms and conditions

of the deceased dealer's franchise, pending acceptance by the

distributor of the designated successor. The distributor may assist the

designated successor with the operation of the station in a supervisory

capacity at its own expense. Within twenty days after the dealer's

death, the designated successor shall give written notice to the

distributor of his or her election to assume and operate the franchise,

which shall include the information required in subdivision one of this

section, and shall also notify the distributor concerning what

arrangements have been made for the operation of the franchise pending

the acceptance or rejection of the designated successor. Within forty

days after such notification, the distributor shall give written notice

to the designated successor of its approval or disapproval of the

designated successor. If the distributor does not approve the designated

successor, it shall state its reasons therefor. If the distributor does

not reply within the specified forty day period, approval of the

designated successor shall be deemed granted.

(b) In the event that the distributor has timely objected to the

designated successor, the personal representative or next-of-kin of the

deceased dealer may, within sixty days from receipt by the designated

successor of the notice of disapproval, elect to transfer or assign the

franchise in accordance with the provisions of subdivision one of this

section. Such an election shall be made by giving written notice to the

distributor of the election within twenty days after the receipt by the

designated successor of the notice of disapproval. Written notice shall

be given to the distributor of the intention to transfer or assign the

franchise in accordance with the provisions of subdivision one of this

section prior to the expiration of such sixty day period. Pending such

a transfer or assignment, the distributor may assume full operation of

the franchise for its own account, in which event it shall account to

the personal representative of the deceased dealer for any inventory,

assets and personal property of any kind on the premises at the time the

distributor accepts possession of the franchise.

(c) In the event that the deceased dealer has not designated a

successor or the designated successor has not elected to assume and

operate the franchise, the personal representative or next-of-kin of the

deceased dealer may, within one hundred twenty days after the dealer's

death, elect to transfer the franchise in accordance with the provisions

of subdivision one of this section. Such an election shall be made by

giving written notice to the distributor of such an election within

twenty days after the dealer's death. Written notice shall be given to

the distributor of the intention to transfer or assign the franchise in

accordance with the provisions of subdivision one of this section prior

to the expiration of such one hundred twenty day period. Within twenty

days after the dealer's death, the personal representative or

next-of-kin shall also give written notice to the distributor concerning

what arrangements have been made for the operation of the franchise

pending the transfer or assignment. Pending such a transfer or

assignment, the distributor may elect to assume full operation of the

franchise for its own account, in which event it shall account to the

personal representative of the deceased dealer for any inventory, assets

and personal property of any kind on the premises at the time the

distributor accepts possession of the franchise.

(d) No franchise by succession or assignment pursuant to this section

shall be valid unless and until the designated successor or assignee

agrees in writing to comply with all of the requirements of the

franchise and any other lease or agreement in connection therewith then

in effect.

3. This section shall not apply to any franchise until the dealer has

operated the service station pursuant to a franchise agreement with the

distributor for a continuous three year period, which period shall

include the term of any franchise in effect prior to or on the effective

date of this section and the term of any franchise transferred to a

designated successor pursuant to paragraph (a) of subdivision two

hereof.

4. Notice of transfer or assignment and notice of objections stating

the reasons therefor may be transmitted by any method of personal

service established under article three of the civil practice law and

rules, or by mailing same by certified or registered mail to the party

to be notified at their actual place of business. Notice by mailing

shall be deemed made when deposited in a post office or official

depository of the United States postal service.

5. Upon receipt of the written notice of objection with reasons

therefor, as provided in subdivisions one and two of this section, a

dealer, designated successor or the personal representative or

next-of-kin of the deceased dealer may bring an action against a

distributor in any court of competent jurisdiction for wrongfully

impeding the transfer or assignment of a franchise, provided that any

such action must be commenced within one year following receipt of such

notice of objection. The court, upon finding that the stated reasons for

objection are arbitrary, capricious or unreasonable, may award money

damages and grant such equitable relief as it deems proper.

6. In the event that any of the time periods referred to herein are

not met by a dealer, assignee, designated successor, personal

representative or next-of-kin, the franchise shall terminate.