Does the RI Amended Law Set A New Franchise Standard?
The RI law calls for:
60 days prior written notice of termination, cancellation, or nonrenewal.
30 days in which to cure any claimed deficiency, provided that a dealer has a right to cure 3 times in any 12 month period.
Even though the dates had been reduced from the original law, it still sounds fair and reasonable to me.
The AAFD Published Standard in its Fair Franchising Standards:
STANDARD 12.3 DEFAULT BY A FRANCHISEE
A franchise agreement should contain a provision setting forth material events of default by a franchisee, a franchisors right to terminate for good cause, after notice and a reasonable time to cure, where appropriate, and a franchisee’s post termination rights and obligations.
The RI Law quantifies the time frame, the question is: Is 60 days notice and 30 days to cure sufficient?
If so, maybe the AAFD should consider using the RI law as the basis of its "Default By A Franchisee" standard?
If it does, that standard has already been vetted and agreed to in RI by the powers that be.
- Franchise topic:
Jim, there is no one size fits all for franchise agreements - which is why the AAFD refers to reasonable notice.
The new legislation may or may not meet the AAFD standards depending on whether for a particular franchise the statutory notice period is reasonable.
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"
Michael,
OK, I understand that the AAFD would rather not commit to a specific time frame.
But, if the AAFD was grading a typical (you ask what's typical) franchise agreement, would the RI law be deemed meeting standards in most cases?
Jim Coen
877-469-3002
Blog: Lets Talk Franchising
Executive Director of the New England Franchise Association
Director & Clerk, Dunkin Donuts Independent Franchise Owners (DDIFO) Board of Directors
Jim Coen
877-469-3002
Blog: Lets Talk Franchising
Executive Director of the New England Franchise Association
President, Dunkin Donuts Independent Franchise Owners (DDIFO, Inc.)
Jim, when I look at a franchise agreement wrt termination notices, I look at a number of things.
1. If the infraction is cured, then can you renew?
2. Is there are a rolling count on infractions, even if they are cured?
3. Are the monetary penalties for settling a termination notice?
There and other considerations are what the AAFD looks for in a contract and relationship.
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"