Equipment dealer termination is usually read out of the dealership agreement, which is where the review often stops. In several states a second body of law sits above that contract and can set its own notice period, cure period and inventory repurchase obligation. Whether it reaches a fitness line depends on how the state wrote its definitions, and the answer differs sharply between two neighboring states.
- Two bodies of law decide an equipment dealer termination
- What the statutes actually require
- What a statutory repurchase schedule can be worth
- Seven checks on an equipment dealer termination clause
- Records and metrics to review now
- Warning signs and common mistakes
- Does a dealer agreement have to be in writing for a state dealership law to apply?
- Do equipment dealer statutes cover commercial fitness equipment?
This is a standing feature of dealer-supplier law that becomes urgent only when a supplier sends a letter, by which point the notice clock has already started. The useful work happens at renewal, and at the moment a stocking commitment is signed.
Two bodies of law decide an equipment dealer termination
The first kind of statute is written around a product category. Minnesota is the clear example. Its definitions section, Minnesota Statutes 325E.068, defines “Heavy and utility equipment,” “heavy equipment,” or “equipment” to mean “equipment and parts for equipment including but not limited to” three named categories.
Those categories are construction, earthmoving and material-handling machines, named down to “excavators, crawler tractors, wheel loaders, compactors, pavers, backhoes, hydraulic hammers, cranes, fork lifts, compressors, generators,” plus trucks and truck parts, and equipment used or adapted for mining or forestry. Commercial fitness equipment is not among them, as the Minnesota Revisor text of Section 325E.068 shows. A fitness dealer in Minnesota generally cannot rely on that chapter.
The second kind of statute is written around the relationship rather than the product. Wisconsin Chapter 135, the Fair Dealership Law, defines a “dealership” as “A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons, by which a person is granted the right to sell or distribute goods or services, or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol, in which there is a community of interest in the business of offering, selling or distributing goods or services at wholesale, retail, by lease, agreement or otherwise.”
No product list appears in that definition. “Community of interest” is defined as “a continuing financial interest between the grantor and grantee in either the operation of the dealership business or the marketing of such goods or services,” and a “dealer” is “a person who is a grantee of a dealership situated in this state.” The chapter also states its own reach: Section 135.025(2)(d) says one purpose is “To govern all dealerships, including any renewals or amendments, to the full extent consistent with the constitutions of this state and the United States.”
That breadth is why a fitness equipment dealership situated in Wisconsin may fall inside Chapter 135 where the same agreement would sit outside Minnesota 325E.0681. It is not automatic. The annotations on the Wisconsin Legislature text of Chapter 135 record relationships courts have held not to be dealerships, including a manufacturer’s representative arrangement, and note that the chapter applies to dealerships doing business within the state. Counsel in the relevant state should determine which side of that line an agreement falls on.
A dealer carrying several brands should also check whether supplier risk is concentrated in one of them, since an equipment dealer termination rarely arrives alone. Our review of supplier continuity, exposure registers and deposit risk sets out how to assess it.
What the statutes actually require
Where Chapter 135 applies, the official text of Chapter 135 governs. Section 135.03 provides that no grantor “may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause,” and adds that “The burden of proving good cause is on the grantor.” Section 135.02(4) defines good cause as failure to comply substantially with essential and reasonable requirements, or bad faith in carrying out the terms.
Section 135.04 then sets the mechanics. A grantor “shall provide a dealer at least 90 days’ prior written notice,” the notice “shall state all the reasons,” and it “shall provide that the dealer has 60 days in which to rectify any claimed deficiency.” If the deficiency is rectified within 60 days, “the notice shall be void.”
The notice provisions do not apply where the reason is insolvency, an assignment for the benefit of creditors, or bankruptcy. Where the reason is nonpayment of sums due under the dealership, the dealer is entitled to written notice of the default and has 10 days to remedy it rather than 60, and the annotations to Section 135.04 record a holding that the 90-day notice is still required in that case.
Section 135.045 adds a repurchase right. If the grantor terminates, then at the dealer’s option the grantor “shall repurchase all inventories sold by the grantor to the dealer for resale under the dealership agreement at the fair wholesale market value.” That section “applies only to merchandise with a name, trademark, label or other mark on it which identifies the grantor.” Section 135.06 provides for damages, actual costs including reasonable actual attorney fees, and injunctive relief.
Minnesota 325E.0681 is narrower in scope but more prescriptive on price. Subdivision 1 bars termination, cancellation, nonrenewal or substantial change in competitive circumstances “without good cause.” Subdivision 2 requires “at least 90 days’ prior written notice” and provides that the dealer has until the notice period expires to cure a claimed deficiency.
The repurchase schedule is where the numbers live. Subdivision 3 requires “an amount equal to 100 percent of the net cost of all unused heavy and utility equipment in new condition” bought “within the 24 months immediately preceding notification by either party of intent to terminate.” Subdivision 4 sets “95 percent of the current net prices on repair parts,” “50 percent of the most recently published price of all other parts,” and 75 percent of net cost for specialized repair tools and signage, with never-used tools or signage repurchased at 100 percent of cost, per the Minnesota Revisor text of Section 325E.0681.
Subdivision 4 also adds “an amount equal to five percent of the prices required to be paid or credited by this subdivision” for handling, packing and loading, unless the manufacturer does that work itself. That allowance reaches the subdivision 4 items only, not the equipment repurchased under subdivision 3. The section was enacted by 1989 c 267 and last amended, on the subdivisions above, in 2001.
| Framework | Scope | Notice before termination | Cure period | Inventory repurchase |
|---|---|---|---|---|
| Wisconsin Chapter 135 | Not limited by product; dealership situated in the state, with a community of interest | At least 90 days’ prior written notice, stating all reasons | 60 days to rectify; notice void if cured. Nonpayment: 10 days | At dealer’s option, fair wholesale market value, limited to merchandise bearing the grantor’s mark |
| Minnesota 325E.0681 | Named categories: construction, earthmoving, material handling, trucks, mining, forestry; the definition reads “including but not limited to” | At least 90 days’ prior written notice | Until the notice period expires | 100 percent of net cost of unused new equipment bought in the prior 24 months; 95 percent listed parts; 50 percent other parts; 75 percent tools and signs; plus 5 percent handling on the parts, tools and signage only |
| No applicable statute | Contract governs | Whatever the agreement says | Whatever the agreement says | Only what the agreement promises |
What a statutory repurchase schedule can be worth
The figures below are illustrative assumptions, not industry data. Commercial fitness equipment is not among the categories Minnesota names, so this demonstrates how a repurchase formula works rather than claiming that a fitness line qualifies.
Assume a dealer holds 312,000 dollars of unused equipment in new condition bought within the prior 24 months, 46,000 dollars of repair parts on the current price list, 9,000 dollars of other listed parts, and 7,500 dollars of specialized tools and signage that have never been used.
Applying the Minnesota percentages gives 312,000 dollars for the equipment, 43,700 dollars for current-list parts at 95 percent, 4,500 dollars for other parts at 50 percent, and 7,500 dollars for the never-used tools and signage at 100 percent. That subtotal is 367,700 dollars. The five percent handling addition reaches only the subdivision 4 items, that is the 55,700 dollars credited for parts, tools and signage, so it adds 2,785 dollars, for 370,485 dollars in total.
The same inventory under Wisconsin’s standard would be valued at fair wholesale market value rather than a fixed percentage, and only the portion bearing the grantor’s mark would qualify. Where no statute applies, the figure is whatever the agreement promised, which in some dealer agreements is nothing. The spread between those outcomes is the reason to read the statute at renewal, not after the letter.
Seven checks on an equipment dealer termination clause
- List the states where the dealership is situated. Rights can differ by state for the same brand, and a general dealership law may reach a fitness line that a product-specific equipment statute does not.
- Compare the contract notice period against any applicable statute. A 30-day contractual notice sits below the 90 days both statutes above require, and a dealer should ask counsel whether the shorter term can control.
- Separate marked from unmarked inventory in the asset register. Wisconsin Section 135.045 applies only to merchandise carrying the grantor’s name or mark, so the register decides what a repurchase claim can cover.
- Date-stamp purchases by brand. Minnesota’s 100 percent repurchase reaches unused new equipment bought within 24 months before notice, which makes purchase dates a recoverable asset rather than a bookkeeping detail.
- Track parts, specialized tools and signage separately. They repurchase at different percentages, and never-used tools and signage sit at 100 percent of cost under the Minnesota schedule.
- Keep a compliance file against every written supplier requirement. Good cause under Wisconsin Section 135.02(4) turns on substantial compliance with requirements that are essential, reasonable and not discriminatory as compared with those imposed on other similarly situated dealers, and the grantor carries the burden of proof.
- Price the exit before signing a stocking or volume commitment. The question is what the inventory is worth if the line ends 18 months into the term, under the law of the state where the dealership sits.
Records and metrics to review now
- Brand-level inventory with purchase dates, serial numbers and unused or demonstrated status.
- Parts valuation at current net price list, flagging items no longer on a published list, and a register of specialized tools, fixtures and signage with original cost and use status. The method carries over from our work on serial-level stock aging and lender reporting under floor plan financing.
- Every written supplier requirement, with evidence of performance against it.
- All notice and cure correspondence, dated, with proof of delivery.
- Territory and house-account terms, which often change in the same amendment as termination language. Our review of dealer territory terms, house-account exceptions and exit provisions covers what to read at renewal.
Warning signs and common mistakes
One costly mistake is signing a renewal without re-reading the termination and repurchase clauses, because Wisconsin Section 135.025(2)(d) expressly reaches renewals and amendments. Another is assuming a rep agreement and a dealership agreement carry the same protection. Our analysis of commission basis, chargebacks and post-termination orders in an equipment rep agreement explains why the two documents behave differently.
Watch for an unusually large stocking order proposed shortly before a line review, a new agreement that adds a jurisdiction or choice-of-law clause, and a notice that lists one reason when earlier correspondence raised another. Section 135.04 requires a notice to state all the reasons where it applies. None of these signals is proof of anything on its own, and each is worth a call to counsel.
Does a dealer agreement have to be in writing for a state dealership law to apply?
Not under the Wisconsin definition. Section 135.02(3)(a) covers a contract or agreement “either expressed or implied, whether oral or written.” Minnesota 325E.068, subdivision 5, likewise defines a dealership agreement as “an oral or written agreement of definite or indefinite duration.” A long-running handshake arrangement may still be a dealership, which cuts in both directions and is worth confirming with counsel.
Do equipment dealer statutes cover commercial fitness equipment?
Generally not, where the statute names its categories. Minnesota lists construction, earthmoving, material-handling, truck, mining and forestry equipment, and fitness equipment appears in none of them. A general dealership law that is not product-limited is the one worth checking first, and the test is the state where the dealership is situated rather than where the supplier sits.
The practical move takes an afternoon. Pull every current dealer agreement, note the state for each dealership, mark the notice and repurchase terms, and ask counsel in each state whether a statute reaches the line. Then build the asset register so brand, purchase date, mark and use status are recorded. Those records turn an equipment dealer termination from a write-off into a claim.
