Legislation that would protect small business owners who enter into franchise agreements was filed Tuesday in the Florida Legislature.
The bill’s intent “is to promote fair business relations between franchisees and franchisors and to protect franchisees against unfair treatment by franchisors,” it says.
“Therefore, it is necessary to regulate the conduct of franchisors and their representatives in order to prevent fraud, unfair business practices, unfair methods of competition … and other abuses upon franchisees in this state.”
A summary provided three highlights. The legislation would:
“Create more financial certainty by protecting small business franchise owners from unjust terminations. Currently, national corporate brands can terminate franchises without cause or warning.”
“Add protections for local franchise owners from unfair restrictions on sales and transfers, therefore giving these small business owners the opportunity to seek a fair return for their business success.”
“Provide needed safeguards for unsubstantiated non-renewal of franchise agreements. Local business owners often invest their savings and years of hard work building up their franchise business, yet the corporations can decide not to renew an agreement even if the business owner has fully complied with its terms.”
“As a chamber of commerce president, I’m particularly sensitive to the threats against small business owners from out-of-state companies,” said Brodeur, a Sanford Republican and chair of the House Health Care Appropriations Subcommittee.
“I want to be sure that there is a level playing field for all business owners in Florida, whether they are a small independent shop or a franchisee,” he added.
Latvala, a Clearwater Republican who chairs the Senate’s Appropriations Committee and owns his own printing business, said franchise-based businesses employ more than 400,000 Floridians.
But he was surprised to learn that only car dealers and farm equipment sales franchisees are currently protected under Florida law. Latvala also told of his experience looking into buying a Dairy Queen franchise.
“One of the impediments of entering into the contract … was that I would have had very little control over my future,” he said. “There wouldn’t be any big impediment (for them) to pull my franchise” even after investing significant sums of money.
The International Franchise Association, which represents franchisors, issued a statement calling the bill “unnecessary government overreach and intrusion into private contract negotiations.”
If it becomes law, the proposal would not be retroactive; that is, it would affect only future franchise agreements.
“Typically, these bills are promoted by a single franchise owner or a handful of franchise owners seeking to generate leverage or extract concessions from a brand company in ongoing contract negotiations,” said IFE President & CEO Robert Cresanti.
Two 7-Eleven convenience store franchisees appeared with Latvala and Brodeur at the press conference but did not speak.
“Like similar bills rejected in numerous states, this bill appears to be a solution in search of a problem that does not exist,” Cresanti added.