Feb 15, 2017 - Reformist Thoughts by |

Alternative Fact: “Franchisees are happy with existing laws governing franchise ownership.

Passing state franchise relationship laws, which aim to protect many of the basic rights of franchisees and dealers that have been stripped from by the language of their individual franchise agreements, is a contentious, arduous and lengthy process. Indeed, even today, many states still do not have legislative protection for franchise owners in their states. See State Franchise Law Protects Franchisees

Florida is the most recent state to begin the process toward enacting such franchise legislation.

The Protect Florida Small Business Act (the “Legislation”), sponsored by Florida State Senator Jack Latvala (SB 750), claims that it will bring fairness to the relationship between corporations and the Floridians who own and work in franchise establishments. The Legislation was filed in the Florida Senate on February 7, 2017. View Bill Info

The Legislation states that its intent “is to promote fair business relations between franchisees and franchisors and to protect franchisees against unfair treatment by franchisors.” The Legislation generally focuses on three areas including protection from unfair terminations of franchises, protection from unfair restrictions on transfers and sales of franchises, and protection from non-renewals of franchise agreements.

As soon as the Legislation was announced, the usual adversaries in the franchise world dusted off their muskets, ran to the front lines, and began shooting. One franchisee advocacy group, the Protect Florida Small Business (“PFSB”), pointed out that industry-specific franchises in Florida were treated better than non-industry-specific franchises: “Florida laws already provide safeguards for local car dealers and agricultural equipment dealers. Those Florida business owners enjoy protections should manufacturers attempt to take over or close down their dealerships with little or no notice. Thousands of Floridians invest their personal capital and take out bank loans to achieve the American Dream. Why shouldn’t the owner of a small sandwich store or oil change and repair shop receive the same protections Florida grants to large automobile dealerships?”

The PFSB also emphasized that the Legislation would assist both franchisors and franchisees: “The goal of this legislation is to allow small business owners operating under a franchise agreement to run their stores, secure with the peace of mind that their livelihoods cannot be ripped away without ample notice or fair compensation. By providing balance to the franchise relationship, the law will let both parties grow and create jobs for Floridians.”

Representing the other side of the Spectrum, President & CEO of the International Franchise Association, Robert Cresanti, in a prepared statement, stated that “Typically, these bills are promoted by a single or handful of franchise owners seeking to generate leverage or extract concessions from a brand company in ongoing contract negotiations, as appears to be the case here.” It is interesting to note, however, that the IFA actually supported very similar pro-franchisee legislation in California at the end of 2015. See Califonia Franchise Act

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