Sec. 42-133m. Assignment of franchise. Automatic termination.
Sec. 42-133m. Assignment of franchise. Automatic termination. (a) A term in
any franchise agreement between a franchisor and a franchisee which prohibits the
voluntary assignment of the franchise to which they are parties, or which requires the
franchisor's consent to such assignment, is ineffective and void as contrary to public
policy unless such term provides that consent may be or is reasonably withheld. Reasonable withholding of consent includes, but is not limited to: (1) Material and substantial
change of the other party's duties; (2) material and substantial increase of the other
party's contractual burden of risk; (3) material and substantial impairment of the other
party's opportunity to obtain return performance.
(b) A term in any franchise agreement between a franchisor and franchisee which
provides for the termination of the franchise to which they are parties upon the death
of the franchisee is ineffective and void as contrary to public policy. If the franchisee
at the time of death held an interest in a franchise, such interest may be passed by will
or by intestacy to his spouse or child, or may be disposed of by his estate. The right of
first refusal of such sale shall be granted to the franchisor. In the event of such disposition
and for the purpose of avoiding or preventing such disposition, the franchisor shall be
required to show that said disposition will materially and substantially prejudice such
franchisor's rights under the terms of the then existing franchise agreement, as set forth
in subsection (a) of this section.
(P.A. 77-493, S. 4.)