Update: Proposed State Legislation

Franchisee Associations Plea With Members to Support Proposed State Fair Franchise Bills

“Urgent Action Required! High Importance!”

That is the message franchisee association leaders have been getting out to their members in a desperate plea for support of the newly proposed Kansas House Bill 2321, referred to as the Kansas Responsible Franchise Practices Act.  According to a letter from Laura Lee Blake, vice president of Fair Franchising & Government Affairs and General Counsel of the Asian American Hotel Owners Association, addressed to other association leaders, AAHOA is very interested in supporting the franchise legislation at the state level.  She said, “It appears this is a groundbreaking piece of legislation that can be used to promote fair franchising legislation in other states, and possibly at the federal level.”

Blake also revealed her anticipated plan of action, which included preparing an “Advocacy Alert” for AAHOA members in Kansas and urging them to contact the sponsor of the bill, and to also invite other associations such as the National Association of Black Hotel Owners, Operators and Developers, Inc. to join in the effort.  And, she plans to share the Bill with other board members and lawmakers in other states, to start the process of introducing similar legislation in other parts of the country.

In a similar letter from Jim Hansen, CEO of the North American Association of SUBWAY® Franchisees, he stated that the Kansas bill addresses numerous issues that associations have with their respective franchisors. He told members, “This Act would make significant progress in shifting the balance of power back in the direction of Franchisees. It will provide a more competitive environment for Franchise Systems.”  But he added that although not all systems take unfair advantage of their position and their market power to extract concessions and impose unfair or abusive contract provisions, the bill will put those who do, in check.

And, from the Domino’s Franchisee Association, CEO Danny Malamis urged members in a letter on the DFA web site, “The chance of this bill becoming law will increase greatly with the number of calls from franchisees in support of this bill.  We need Franchisees willing to call in support of this Act as well as franchisees that will be willing to testify in support at a hearing.”

The National Franchisee Association, representing Burger King operators, completed a grid based comparison of the old Coble Bill to the Kansas Bill to the Commonwealth of Massachusetts proposed bill, and shared it with many other franchisee associations. CEO Frank Capaldo urged association leaders to use it as their own, in comparing their own agreements.

On February 7, Senator Steve Southerland introduced Tennessee Senate Bill 367, known as the Tennessee Franchise Disclosure Act of 2007, and House Bill 322 was filed simultaneously in that state.  Franchisee groups are now analyzing those bills. 

Reaction from Sponsors

As activity related to the newly introduced franchise legislation intensifies, attempts to obtain updates on the bills from the sponsors proved unfeasible.  According to a spokesman for Steve Brunk, Chairman of Commerce and Labor Committees and sponsor for Kansas Bill 2321 (pdf), Mr. Brunk was not available to give an update because he was in session. Yesterday he explained that because they are facing turnaround, they have to finish hearing all the bills that have been passed out of committee, and more than likely they would be in session all day and into the night. He said, “They don’t want to work on Saturday, so they are only taking time out for lunch and dinner.” But he did offer that they have had interest in the House bill, and it hasn’t all just been in Kansas, but in other states as well.

Regarding two other franchise bills introduced in Tennessee, a spokesperson for Senator Southerland said the Senator is not willing to comment on the Act at this time.