Texas Business and Commerce Code
Sec. § 57.154
Good Cause Determination


Except as specifically provided otherwise by this chapter, good cause for termination of a dealer agreement exists for purposes of this subchapter if:


the dealer fails to substantially comply with essential and reasonable requirements imposed on the dealer under the terms of the dealer agreement, provided that such requirements are not different from requirements imposed on other similarly situated dealers either by their terms or by the manner in which they are enforced;


the dealer or dealership has transferred a controlling ownership interest in its business without the supplier’s consent;


the dealer has filed a voluntary petition in bankruptcy or an involuntary petition in bankruptcy has been filed against the dealer and has not been discharged earlier than the 31st day after the date the petition was filed;


there has been a sale or other closeout of a substantial part of the dealer’s assets related to the business;


there has been commencement of an action or proceeding for the dissolution or liquidation of the dealership;


there has been a change in dealer or dealership locations without the prior written approval of the supplier;


the dealer has defaulted under the terms of any chattel mortgage or other security agreement between the dealer and the supplier;


there has been a revocation of any guarantee of the dealer’s present or future obligations to the supplier, except as provided by Subsection (b);


the dealer has failed to operate in the normal course of business for seven consecutive days or has otherwise abandoned the dealer’s business;


the dealer has been convicted of or pleaded nolo contendere to a felony affecting the relationship between the dealer and supplier;


the dealer has engaged in conduct that is injurious or otherwise detrimental to:


the dealer’s customers;


the public welfare; or


the representation or reputation of the supplier’s product; or


the dealer has consistently failed to meet and maintain the supplier’s requirements for reasonable standards and performance objectives, so long as the supplier has provided the dealer with reasonable standards and performance objectives based on the supplier’s experience in other comparable market areas.


Good cause is not considered to exist for purposes of Subsection (a)(8) if:


a person revokes any guarantee of the dealer’s obligations to the supplier in connection with or following the transfer of the person’s entire ownership interest in the dealership; and


the supplier does not require the person to execute a new guarantee of the dealer’s present or future obligations to the supplier in connection with the transfer of the person’s ownership interest in the dealership.
Added by Acts 2011, 82nd Leg., R.S., Ch. 1039 (H.B. 3079), Sec. 2, eff. September 1, 2011.
Last accessed
Jul. 12, 2020