In an effort to protect the interests of franchisees from inequitable franchise agreements, the Coalition of Franchisee Associations (CFA) opposes Rhode Island Senate Bill 2592. 

CFA is a coalition of franchisee associations focused on strengthening the franchisee community; we represent over 15,000 franchisees employing over 1.5 million individuals. CFA members consist of franchisee organizations providing products and services ranging from food items to automotive repairs. CFA opposes SB 2592 in that it weakens franchisee’s positions relating to contract terminations by diminishing the intent of The Rhode Island Fair Dealership Act (hereinafter “Act”).

The Act became effective in June 2007 and addresses the concern that franchisors have inherently superior economic and bargaining power in franchise negotiations. The law “levels the playing field” in contract negotiations by protecting franchisees from unfair terminations. Specifically, the law incorporates the following provisions: 

• “Notice Period” provision - requires the franchisor to give the franchisee at least 90 days written notice prior to termination of their contract. 
• “Cure Period” provision - provides the franchisee 60 days to remedy any claimed deficiencies from the termination notice.  
• “Good Cause” provision – specifically defines “good cause” for franchisor’s termination of franchise agreement as:

- Failure to comply with reasonable requirements of the franchise agreement.
- Bad faith in carrying out the terms of the agreement.

SB 2592 would lessen the notice period and eliminate both the cure period and good cause requirement, leaving franchisees susceptible to questionable terminations with no time to correct assumed discrepancies.  CFA believes that small business owners should be given ample notice of a contract termination and the opportunity to remedy any problems before losing their businesses. 

CFA respectfully requests that the Rhode Island legislature preserve the intent and integrity of The Rhode Island Fair Dealership Act by opposing SB 2592. On behalf of our members and the millions of individuals they employ, we thank you for your consideration of our concerns. 

Coalition of Franchisee Associations
1750 K Street, NW Suite 450
Washington D.C. 20006
(202)416-0270