ORS Chapter 650
Chapter 650 — FranchiseTransactions
2009 EDITION
FRANCHISETRANSACTIONS
TRADEREGULATIONS AND PRACTICES
GOODSAND SERVICES
(Generally)
650.005 Definitionsfor ORS 650.005 to 650.100
650.010 Franchisesellers required to maintain books and records; filings with director
650.015 Whenfranchise sale or offer for sale is made in this state
650.020 Liabilityof franchise seller; defenses; amount of recovery; attorney fees; joint andseveral liability; limitation on action; indemnification of corporation; rightof contribution
(Administration)
650.050 Rules
650.055 Generalduties and powers of director
650.057 Ordersissued under ORS 650.055
650.060 Investigativepowers of director; protection against unreasonable investigation; contempt
650.065 Injunctiverelief; attorney fees; appointment of receiver or conservator; conditions ofawarding damages and injunctive relief
650.070 Directoras agent for service of process
650.075 Mannerof executing service of process; effect of initial service
650.080 Whenpersonal service of process required
650.085 Othercivil or criminal remedies unaffected
650.095 Civilpenalties
650.100 Dispositionof civil penalties
MOTORVEHICLE DEALERSHIPS
650.120 Definitionsfor ORS 650.120 to 650.170
650.130 Prohibitedconduct by manufacturer, distributor or importer
650.140 Goodcause required to terminate dealer franchise; protest of termination; notice;when reasons for termination required
650.145 Compensationdue dealer upon termination of franchise
650.150 Enjoiningestablishment of certain franchises or relocation of existing dealership insame market area; complaint; determination of good cause; when offer of newfranchise or relocated dealership required; notice to existing or formerdealerships; attorney fees
650.153 Liabilityof franchisor for repair of motor vehicle that becomes inoperative prior tosale to consumer
650.155 Liabilityof manufacturer for damages to vehicles before delivery to carrier
650.158 Predeliverypreparation and warranty service; notice to dealers; schedule of compensation;claims by dealers
650.162 Transfer,assignment or sale of interest in dealership or franchise; notices; approval offranchisor; right of first refusal
650.165 Prohibitedfranchise conditions
650.167 Violationof ORS 650.140 or 650.150 as irreparable injury
650.170 Dealer’sremedy
MOTORFUEL FRANCHISES
650.200 Definitionsfor ORS 650.200 to 650.250
650.205 Prohibitedconduct by franchisor
650.210 Rightsand prohibitions governing relationship between franchisor and franchisee
650.215 Prohibitedconduct in offer, sale or purchase of franchise
650.220 Consentof franchisor to sale, assignment or transfer of franchise; conditions fortrial franchise
650.225 Deathof franchisee; when franchisor required to enter into new franchise withdesignee of franchisee; notice; qualifications; possession of franchisepremises
650.230 Transferof franchise to corporation in which franchisee has controlling interest;conditions
650.235 Franchisorprohibited from requiring operation of service station in excess of 16 hoursper day; exceptions
650.240 Whentransfer of motor fuel a sale in commerce
650.245 Principleof good faith
650.250 Injunctiverelief or damages; limitation on commencement of action; attorney fees
RECREATIONALVEHICLE FRANCHISES
650.300 Definitionsfor ORS 650.300 to 650.480
650.310 Goodcause; determination
650.320 Dealershipagreement
650.330 Comparableterms and conditions; grantor sales to public
650.340 Termination,cancellation or failure to renew; notice; grounds
650.350 Dealer’srights upon termination, cancellation or failure to renew
650.360 Coercionprohibited
650.370 Transferby dealer
650.380 Dealer’ssuccessor
650.390 Dealercompensation for warranty service; disapproval of warranty service claims;recall notice requirements
650.400 Recalls
650.410 Dealer’swarranty obligations
650.420 Requireddisclosures
650.430 Damagedor defective vehicles
650.440 Grantor’sownership, operation or control of dealership
650.450 Indemnification;grantor and dealer
650.460 Indemnification;warrantor and dealer
650.470 Remedies;grantor and dealer; attorney fees
650.480 Remedies;warrantor and dealer; attorney fees
GOODSAND SERVICES
(Generally)
650.005Definitions for ORS 650.005 to 650.100. As used in ORS 650.005 to 650.100,unless the context requires otherwise:
(1)“Area franchise” means a contract or agreement between a franchisor and asubfranchisor whereby the subfranchisor is granted the right, for a valuableconsideration, to sell or negotiate the sale of franchises in the name or onbehalf of the franchisor.
(2)“Control” means the possession, directly or indirectly, of the power to director cause the direction of the management and policies of a person, whetherthrough the ownership of voting securities, by contract, or otherwise.
(3)“Director” means Director of the Department of Consumer and Business Services.
(4)“Franchise” means a contract or agreement, whether oral or written, by which:
(a)A franchisee is granted the right to engage in the business of offering,selling or distributing goods or services under a marketing plan or systemprescribed in substantial part by a franchisor;
(b)The operation of the franchisee’s business pursuant to such plan or system issubstantially associated with the franchisor’s trademark, service mark, tradename, logotype, advertising or other commercial symbol designating thefranchisor of such plan or system; and
(c)The franchisee is required to give to the franchisor a valuable considerationfor the right to transact business pursuant to the plan or system. Payment fortrading stamps in itself is not consideration for the right to transactbusiness pursuant to a plan or system.
(5)“Franchisee” means a person to whom a franchise is sold by a franchisor.
(6)“Franchisor” means a person, including a subfranchisor, who sells a franchisefor $100 or more to a franchisee or subfranchisor.
(7)“Offer” or “offer to sell” includes every attempt to offer to dispose of, orsolicitation of an offer to buy, a franchise or interest in a franchise forvalue.
(8)“Sale” or “sell” includes every contract or agreement of sale of, contract tosell, or disposition of a franchise or interest in a franchise for value, butdoes not include the renewal or extension of an existing franchise without anymaterial change in the terms thereof if there is no interruption in theoperation of the franchised business by the franchisee.
(9)“Subfranchisor” means a person to whom an area franchise is sold by afranchisor. [1973 c.509 §1; 1987 c.414 §77; 1993 c.744 §16]
650.010Franchise sellers required to maintain books and records; filings withdirector.Every person who offers to sell a franchise in this state shall maintain acomplete set of books, records and accounts of any such sale and thedisposition of the proceeds thereof, and shall, at such times as the Directorof the Department of Consumer and Business Services may require, file in theoffice of the director a report, stating the names of each person to whom afranchise has been sold by the person filing the report, the amount of theproceeds derived and the disposition. [1973 c.509 §3]
650.015When franchise sale or offer for sale is made in this state. (1) A sale oroffer to sell a franchise is made in this state when an offer to sell is madein this state, or an offer to buy is accepted in this state, or, if thefranchisee is domiciled in this state, the franchised business is or will beoperated in this state.
(2)An offer to sell a franchise is made in this state when the offer eitheroriginates from this state or is directed by the offeror to this state andreceived at the place to which it is directed. An offer to sell is accepted inthis state when acceptance is communicated to the offeror in this state.Acceptance is communicated to the offeror in this state when the offereedirects it to the offeror in this state reasonably believing the offeror to bein this state and it is received at the place to which it is directed.
(3)An offer to sell a franchise is not made in this state merely because:
(a)The publisher circulates or there is circulated on behalf of the publisher inthis state any bona fide newspaper or other publication of general, regular andpaid circulation outside this state during the past 12 months; or
(b)A radio or television program originating outside this state is received inthis state. [1973 c.509 §2]
650.020Liability of franchise seller; defenses; amount of recovery; attorney fees;joint and several liability; limitation on action; indemnification of corporation;right of contribution. (1) Any person who sells a franchise is liable asprovided in subsection (3) of this section to the franchisee if the seller:
(a)Employs any device, scheme or artifice to defraud; or
(b)Makes any untrue statement of a material fact or omits to state a material factnecessary in order to make the statements made, in light of the circumstancesunder which they were made, not misleading.
(2)It shall be an affirmative defense to any action for legal or equitableremedies brought under subsection (1) of this section if the franchisee knew ofthe untruth or omission.
(3)The franchisee may recover any amounts to which the franchisee would beentitled upon an action for a rescission. Except as provided in subsection (4)of this section, the court may award reasonable attorney fees to the prevailingparty in an action under this section.
(4)The court may not award attorney fees to a prevailing defendant under theprovisions of subsection (3) of this section if the action under this sectionis maintained as a class action pursuant to ORCP 32.
(5)Every person who directly or indirectly controls a franchisor liable undersubsection (1) of this section, every partner, officer or director of thefranchisor, every person occupying a similar status or performing similarfunctions, and every person who participates or materially aids in the sale ofa franchise is also liable jointly and severally to the same extent as thefranchisor, unless the nonseller did not know, and, in the exercise ofreasonable care, could not have known, of the existence of the facts on whichthe liability is based.
(6)An action may not be commenced under this section more than three years afterthe sale.
(7)A corporation which is liable under ORS 650.005 to 650.100 shall have a rightof indemnification against any of its principal executive officers, directorsand controlling persons whose willful violation of any provision of ORS 650.005to 650.100 gave rise to the liability. All persons liable under ORS 650.005 to650.100 shall have a right of contribution against all other persons similarlyliable, based upon each person’s proportionate share of the total liability,except:
(a)A person willfully misrepresenting or failing to disclose shall not have anyright of contribution against any other person guilty merely of a negligentviolation; and
(b)A principal executive officer, director, or controlling person shall not haveany right of contribution against the corporation to which the person sustainsthat relationship. [1973 c.509 §4; 1979 c.284 §185; 1995 c.696 §40]
(Administration)
650.050Rules.In accordance with this section and ORS chapter 183, the Director of theDepartment of Consumer and Business Services may from time to time make, amendand rescind such rules as are necessary to carry out the provisions of ORS650.005 to 650.100. [1973 c.509 §5]
650.055General duties and powers of director. The Director of the Department ofConsumer and Business Services may:
(1)Undertake the investigations, including investigations outside this state, thatthe director considers necessary to:
(a)Determine whether a person:
(A)Has failed to comply with ORS 650.010;
(B)Has engaged in, is engaging in or is about to engage in an act or practice thatwould give rise to liability under ORS 650.020; or
(C)Has violated, is violating or is about to violate a rule of the directoradopted under ORS 650.050.
(b)Aid in the enforcement of ORS 650.005 to 650.100 or in the formulation of rulesand forms that carry out ORS 650.005 to 650.100.
(2)Require a person to file a statement in writing, under oath or otherwise,concerning the matter being investigated.
(3)When the director has reason to believe that a person has failed to comply withORS 650.010, issue an order to comply.
(4)When the director has reason to believe that a person has engaged in, isengaging in or is about to engage in an act or practice that would give rise toliability under ORS 650.020, issue an order to cease and desist from the act orpractice.
(5)When the director has reason to believe that a person has violated, isviolating or is about to violate a rule of the director adopted under ORS650.050, issue an order to cease and desist from the violation.
(6)Publish information concerning any:
(a)Failure to comply with ORS 650.010;