The Lesson from Maine on Franchisee Protection Legislation
The recent defeat of the Franchisee Protection Bill in Maine speaks volumes about the future of these bills. From the state of Maine, birthplace of Dorothea Dix, John Ford, Stephen King and Longfellow, the legislature has sent a message to those who advocate franchisee protection legislation. This from a state that used to be a bastion of old fashioned New England Republicanism but is now more politically mainstream. From Maine there is a message regarding this type of proposed legislation and it should serve as an indication of where existing and future efforts to introduce and pass these bills will end up. Although there are other franchisee protection legislation efforts underway in several states the possibility of their success remains unlikely.
Here are Ten Reasons Why:
- It’s difficult to generate sympathy for franchisees that are recognized as business owners as opposed to, for example, the unwitting victims of residential mortgage scams.
- Recent news regarding illegal wage practices on the part of some franchisees, like the multi-unit McDonalds franchisee in NYC, generates more negative publicity and less sympathy for franchisees. In fact, the franchise industry may need to unite in order to combat wage equalization efforts underway in a number of states.
- Anecdotal reports of franchisees losing their investment are insufficient to motivate legislative action. There are no horror stories to stir legislators to action.
- The states have far too many issues to deal with ranging from budget deficits to job creation to funding legacy programs to deal with franchise legislation.
- The franchise industry is already regulated by the FTC with disclosure requirements and most state legislators would accept this oversight as more than adequate.
- Remedies for aggrieved franchisees already exist through the courts and the judicial system.
- Reluctance on the part of states to introduce any legislation that could be perceived as job killing. The risks far outweigh the benefits.
- The business relationship between franchisees and franchisors negates the reported harm done to consumers. Its virtually impossible to describe and quantify the harm done to consumers as a result of the franchisor-franchisee relationship. This legislation wouldn't improve the quality nor reduce the price consumers pay for franchisee products and services.
- Absent the advocacy and support of certain franchisee associations the participation and endorsement by exiting franchisees for proposed legislation has been weak or virtually non-existent
- The amount of information available to prospective franchisees is greater than at any time in the history of franchising. The growth of the franchise industry belies problems that require new laws and regulations.
If one were to view the state of Maine as a test lab for franchisee protection legislation the recent defeat of this proposed legislation could serve as a predicator of the challenges faced by those who seek to introduce these bills in other states.