IFA Successfully Lobbies Rhode Island To Change Franchise Law
The Rhode Island Fair Dealership Act (pdf), the first state law of its kind since Iowa passed a fair franchise law in 1992, has several sections that the IFA targeted for change. Franchisors had been required to provide Rhode Island franchisees and dealers (a type of franchise owner) with a 90-day written notice before termination, cancellation or nonrenewal of a franchise license and at least 60 days to cure or fix nonconformance to a franchise’s (dealership’s) operating standards, unless it is a health problem, in which case the franchise owner or dealer has only 24 hours to cure it.
The new amendment (pdf) that the IFA pushed shows such state requirements completely crossed out. However, according to the IFA Insider newsletter, the law will now require "60 days written notice for termination, cancellation or non-renewal" of a franchise agreement and 30 days in which to cure any nonconformance issues. These new figures have been whittled down 30 days from what they had been.
Despite lobbying efforts and the successful passing of the amendment, the Rhode Island Dealership Act has remained largely intact.
David French, Vice President of Government Relations for the IFA, told Blue MauMau, “The amendment has been passed by the House and Senate. We are getting the bill ready for the Governor’s signature. I expect it to be on the glide path to completion within the next four or five days.”
Besides setting franchise owner-operators a legal termination and cure minimum, the IFA stated that it was extremely uncomfortable with the act’s description of franchisors as having “superior economic power and superior bargaining power in negotiations.” Such description could be interpreted by Rhode Island courts in implementing the act.
The IFA would like to eliminate such state laws. “The IFA has an agenda to create a less regulatory environment for franchising,” says French.
Mr. French describes the specifics of how the Rhode Island Fair Dealership Act was initiated last year. He explains, “Rhode Island was passed when a licensed distributor of a hair care product was terminated. It was not a franchise. But when RI passed a law in response to this, the law they passed swept up all business format franchising. There’s a lot of collateral damage in franchising when you use a sledge hammer to swat a fly.”
DLA Piper, a law firm that typically represents franchisors, believes that Rhode Island has simply dusted off and cloned Wisconsin’s Fair Dealership Law, a law enacted almost a quarter of a century ago to protect franchise owners.
“Rhode Island passed this law to give extraordinary rights to the least adherent franchisees in a system," elaborates Mr. David French. "[With its passing] all of a sudden the tools a franchisor can use in order to keep franchise owner-operators adhering to system standards for quality assurance was tossed out in Rhode Island.”The IFA spokesman explains why franchise owner-operators should be supportive of the association’s stand. “If your [franchise] neighbor’s quality goes down dramatically because your franchisor no longer has leverage in forcing your neighbor to be compliant with system standards, then your investment and your brand will be hurt.”
Critics of such laws say that they lead to considerably more litigation. French adds that government regulation of franchising is clumsy at best. “Lawmakers are not in the business of franchising," declares French. "They don’t understand it. They pass a law in response to a certain set of circumstances and they can create a lot of collateral damage for folks involved in franchising. The Rhode Island circumstance is a good example of that.”
French concludes, “The IFA’s franchisee members by and large would prefer that we work [disagreements] out within the IFA through better dialogue between franchisees and franchisors rather than take them to a state legislature or Congress. We don’t think the end result in state legislature or Congress is going to be favorable to franchising. We think they are going to do a lot more harm than good.”
Note: Rhode Island state senators and their aides have not yet replied to this reporter about the status of their amended act.
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Related Reading:
- IFA, DLA Piper Reaction to Rhode Island Law
- Educating Mayors on Franchising
- IFA Stifles Broadening of New Jersey Franchisee Protection Law
- Rhode Island Senate Bill 2592/CFA
- IFA and CFA Square off in Rhode Island
- Franchise topic:
Uh, somebody needs to tell us what actually was passed, what is pending, and the evidence of zor/zee influence.
I find this very confusing, so far.
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Is the amendment dated 2008 passed or not?
It seems completely at odds with what the IFA is talking about.
What am I missing?
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
The bill has passed both House and Senate. According to the Legislative office that I contacted 5 minutes ago, the bill has yet to be transmitted to the Governor's office to be signed into law.
The amendment is expected to be signed into law by Governor Carcieri any day at any moment. When that happens, it will be immediately reported in a news story on Blue MauMau.
Michael Webster PhD LLB
Franchise News
Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"
Two companion bills, both amendments to last year's Rhode Island Fair Dealership Act, have been sent to Rhode Island's Governor Donald Carcieri's office for approval. According to a spokesperson for Rhode Island's legislative branch, H8150 was submitted to the governor's office on June 27 and S2592 sent yesterday, June 30.
The governor has six days, not including Sunday, or until Thursday midnight, July 3, to veto the bills. Without a veto, the bills automatically become law.
- Status of S2592 can be tracked here
- Status of H8150 can be tracked here
As of 5pm Tuesday, July 1, both companion bills are still in transmission to the governor's office. He has not signed or vetoed the bills.It never fails. When will you FranWads grow up and learn that groups without substantial resources are really only makers of noise.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Was Dunkin' Brands involved in lobbying for the Rhode Island franchise practice act amendment?
Dunkin' is getting involved with federal and state legislation in a big way - as this article from today shows. I'm betting that since the IFA has been involved with trying to remove the Rhode Island fair franchise/dealership legislation. And IF DDIFO, the independent association of Dunkin' franchise owners, was involved, then YOU KNOW that Dunkin' Brands came in full force to Rhode Island - especially if they have someone full-time to do just that.
Dunkin' has just announced the hiring of a Director of Federal and State Government Affairs Cicely Simpson. Her boss is Dunkin Brands' Public Affairs Officer, Steve Caldeira. Ms. Simpson says her focus is on menu labeling and immigration in today's Chain Leader magazine.
Read the full interview at today's Chain Leader magazine
I'd like to see a news article exploring Dunkin's involvement with the Rhode Island AND New Jersey legislation. Was Ms. Simpson hired after what happened in Rhode Island or was one of her first duties to stop it?
This is all wild conjecture on my part, but I smell a story here . . .
And whatever happened to the MA fair franchise bill last summer? Forgotten? Was DD involved with that?
I just looked up Deval Patrick. According to Wikipedia. Governor Patrick of Massachusetts, a Harvard law school graduate, was in-house counsel for Coca-Cola and sat on the board at UAL and Ameriquest. There is no mention of him working for Bain Capital. But it should be noted that Wikipedia is not always accurate. So if there is a Bain connection, can you provide a source?
Are you thinking of Massachusetts ex-governor and ex-presidential candidate Mitt Romney. He was a Bain senior executive.
Speaking of which, a video clip posted on Blue MauMau shows Quizno's CEO, Greg Brenneman, speaking about when both he and Romney worked at Bain and Company together. Both Romney and Brenneman are Harvard Business School graduates.
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