Iowa franchise termination law
Iowa Code 537A.10 requires good cause, written notice and a 30 to 90 day cure before termination. Older agreements fall under chapter 523H.
Which Iowa statute applies depends on the date of the franchise agreement. Chapter 523H governs only agreements entered into before 1 July 2000. Section 523H.2A says: "A franchise agreement which is entered into on or after July 1, 2000, shall be subject to section 537A.10." For a newer agreement, 537A.10 is the section to read, and this page is built around it.
Both regimes give the same cure range and the same non-renewal notice (523H.7 and 523H.8 match 537A.10 on those points). The text below comes from the official Iowa Code PDFs, checked on 28 October 2026.
The termination rules in 537A.10(7)
| Point | What the statute says |
|---|---|
| Good cause | Required. It means "cause based upon a legitimate business reason" and includes failure to comply with any material lawful requirement, provided the termination is "not arbitrary or capricious." |
| Who proves arbitrariness | The franchisee. The statute puts the burden of showing the action was arbitrary or capricious on the franchisee. |
| Notice | Written notice stating the basis for the proposed termination, before termination. |
| Cure period | A reasonable period, "in no event ... less than thirty days or more than ninety days." For nonpayment of money due, the period "need not exceed thirty days." |
Termination with notice but no cure
Section 537A.10(7)(c) lets a franchisor terminate on written notice "without an opportunity to cure" in listed cases:
- bankruptcy or a judicial finding of insolvency;
- an assignment for the benefit of creditors;
- voluntary abandonment, meaning failure to operate for five consecutive business days;
- a written agreement to terminate;
- a knowing material misrepresentation;
- repeated failure to comply with material provisions, where enforcement is not arbitrary or capricious;
- lawful seizure or foreclosure;
- a felony or criminal misconduct that materially affects the franchise;
- operation that imminently endangers public health and safety.
Coverage, non-renewal and remedies
Section 537A.10 applies to a franchise operated in Iowa, meaning the premises are physically located in Iowa (or, for marketing rights, the franchisee's principal business office is in Iowa). Picking Iowa law in the agreement does not by itself bring a franchise inside the section.
For non-renewal, 537A.10(8) says a franchisor shall not refuse to renew unless the franchisee was told "at least six months prior to the expiration date" and one of the listed circumstances exists, such as good cause that is not arbitrary or capricious, mutual agreement, or complete withdrawal from the geographic market. The 537A.10 text read contains no separate asset-repurchase section; the older 523H.11 has one for pre-July 2000 agreements.
Under 537A.10(13), a violator is "liable for damages caused by the violation, including ... costs and reasonable attorneys' and experts' fees," and injunctive and other equitable relief is available. No limitation period was found in the sections read.
Subsections (3), (4) and (14) make three kinds of clause void: one restricting jurisdiction to a forum outside Iowa, one waiving compliance, and one requiring another state's law in place of the section. Settlements are not affected. Arbitration, mediation and other nonjudicial resolution may still be agreed.
Questions to look for in your own notice and agreement
- What date was the agreement signed, before or after 1 July 2000?
- Does the notice state the basis for termination, and does it say whether a cure period applies?
- If it gives a cure period, how many days is it counted from, and is it inside 30 to 90?
- Does the notice rely on one of the no-cure grounds, and which one?
- Does the agreement choose another state's law or a forum outside Iowa?
Your notice and your agreement control your own dates; a lawyer licensed in Iowa can say how 537A.10 applies to them. See also incurable defaults, forum-selection clauses and the state comparison.
Where this came from
- Iowa Code section 537A.10, Iowa Legislature (checked 28 October 2026).
- Iowa Code chapter 523H, Iowa Legislature (checked 28 October 2026).