1. The Laws of New York
  2. Consolidated Laws
  3. General Business
  4. Article 11-B: Franchises for the Sale of Motor Fuels


Section 199-I Dealers' rights to transfer, assign or dispose of the franchise upon notice to distributor

General Business (GBS)

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.