Rhode Island Fair Franchise Revision Becomes Law
Rhode Island is the first state to enact franchise relationship legislation since Iowa did so in 1992. Franchise relationship laws govern existing franchisees as opposed to disclosure laws that focus on registration and disclosure documents for buyers.
Franchisee attorney Michael Garner of Dady & Garner, P.A. elaborates. "Franchise relationship laws protect a franchise from arbitrary termination or non-renewal. If a franchisor terminates, then a franchise owner's investment in things like McDonald's golden arches is sunk. That is different than disclosure laws, which protect prospective franchisees from making uninformed investment decisions."
Terry Hill, Vice President of Communication for the International Franchise Association, told Blue MauMau last year, "Since there are literally thousands of bills introduced in state legislatures each year (more than 2,300 last year) that have a potential impact on commercial contractual relationships of the distribution / dealer/ licensee/ franchise variety, we didn't detect the application to franchises in this particular bill."
The original act passed quickly and unexpectedly.
This year the IFA and Dunkin' Brands had lobbied vigorously for the elimination of last year's Rhode Island Fair Dealership Act. What they were able to negotiate was a compromise in which franchisors would be required to give 60 days written notice for termination instead of the original 90. Franchisors are also required to give 30 days advance notice to cure any nonconformance issues instead of 60.
Despite lobbying efforts and the successful passing of the amendment, the Rhode Island Dealership Act remains largely intact.
Related readings:
- IFA, DLA Piper Reaction to Rhode Island Law
- IFA Successfully Lobbies Rhode Island To Change Franchise Law
- Franchising Laws Move Forward in 2007
- 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:
This was another big effort by DDIFO.
DDIFO was the driving force behind saving this law.
When I think of RI, I think of places like P Town and The Cape, sorta like Mahtha's Vineyard in Mass - playgrounds for the wealthy.
Playgrounds for the wealthy are usually deliberately set up to have nothing to attract the less fortunate because the less fortunate tend to ruin the scenery for the more fortunate. If the more fortunate can limit (economically or otherwise) the number of the less fortunate to the service businesses that serve the more fortunate, then the area is paradisiacal.
So if you find out that you do not enjoy places like RI, it could be that they don't want the likes of you to enjoy RI. Being half Irish and half Russian, I am well versed on places that would prefer that the likes of me go to New Jersey or some place more suited to my station in life.
So it comes as no surprise that some folks would prefer to eat their donuts in venues more suitable to their circumstances.
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
But, I do disagree with the assumption in this Article that disclosure laws protect prospective franchisees from making "uninformed investments" as stated in the above article. I believe that it is "ineffective disclosure law and regulation" to begin with that has enabled the franchisor to exploit and abuse the franchisees who most often, in great good faith, unknowingly sign on to a bad relationship with a franchisor who, under public policy, is protected by law, process, and the signed franchise agreement to exploit the franchisee always to the advantage of the franchisor.
This RI Law is merely a bandaide that won't stop any serious bleeding of franchisees in RI who have unknowingly made "uninformed investments" is "pig" and "dog" franchisees who are eligible for quickie guaranteed 90% loans from the Small Business Association.
"unknowingly sign on to a bad relationship with a franchisor who, under public policy, is protected by law, process, and the signed franchise agreement" - Writes Carol
Are you saying people don't or can't read contracts before they sign them?
Joan
Who wants to do business in Rhode Island anyway? The armpit of this country.
Since RI has more DUnkin' Donuts shops per capita than any other place on the globe, I figure they want to do business there.
I think that Richard's advice holds for you, brokers. Maybe you don't like RI because RI disliked you first.
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