South Dakota § 32-6B-49.1 - Terms or conditions not allowed in franchise agreement.

§ 32-6B-49.1. Terms or conditions not allowed in franchise agreement.

No franchise agreement may include any term or condition in a franchise that:

(1)    Requires the franchisee to waive trial by jury involving the franchisor;

(2)    Specifies the jurisdictions, venues or tribunals in which disputes arising with respect to the franchise, lease or agreement shall or may not be submitted for resolution or otherwise prevents a franchisee from bringing an action in a particular forum otherwise available under the law;

(3)    Requires that disputes between the franchisor and franchisee be submitted to arbitration or to any other binding alternate dispute resolution procedure. However, any franchise, lease or agreement may authorize the submission of a dispute to arbitration or to binding alternate dispute resolution if the franchisor and franchisee voluntarily agree to submit the dispute to arbitration or binding alternate dispute resolution at the time the dispute arises;

(4)    Requires a franchisee to pay the attorney fees of a franchisor;

(5)    Prohibits the holder of an existing franchise from being dualed with another franchisor's line that does not substantially affect the current franchisor or community;

(6)    Prohibits the holder of an existing franchise from moving to another facility within the franchisee's community that is equal to or superior to the franchisee's former facility;

(7)    Prohibits the holder of an existing franchise from making improvements to the franchisee's current facility within the franchisee's community; or

(8)    Permits a franchisor or the franchisor's assignee to exercise a right of first refusal to acquire a franchisee's franchise or a franchisee's assets in connection with the sale by a franchisee of that franchisee's franchise or assets.

An existing franchisee shall give the franchisor prior written notice of the proposed dual arrangement, relocation, or improvement described in subdivisions (5), (6), and (7). The notice shall contain sufficient information for the franchisor to evaluate the proposal. Within sixty days of receiving said notice, the franchisor shall send a letter to the franchisee either approving or disapproving the proposal. If the franchisor does not notify the franchisee of its approval or denial of the dual arrangement, relocation, or improvement within the sixty-day period, the franchisee's proposal shall be deemed to have been approved. No franchisor may unreasonably withhold its approval. Denial of a proposed dual arrangement or facility improvement shall be supported by credible evidence that it will substantially affect in an adverse way the current franchisor or community. Denial of a proposed relocation shall be supported by credible evidence that the new location is not at least equal to the franchisee's former facility.

This section does not apply to agreements pertaining to the lease or sale of real property.

Source: SL 1990, ch 244, § 2; SL 1998, ch 179, § 1; SL 2002, ch 153, § 1; SL 2010, ch 156, § 7, eff. Mar. 9, 2010.