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:

  1. 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.
  2. 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.
  3. Anecdotal reports of franchisees losing their investment are insufficient to motivate legislative action. There are no horror stories to stir legislators to action.
  4. 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.
  5. The franchise industry is already regulated by the FTC with disclosure requirements and most state legislators would accept this oversight as more than adequate.
  6. Remedies for aggrieved franchisees already exist through the courts and the judicial system.
  7. Reluctance on the part of states to introduce any legislation that could be perceived as job killing. The risks far outweigh the benefits.
  8. 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.
  9. 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
  10. 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.

 

Profile picture for user Ed Teixeira

Comments

Primary Reason

Ed

The primary reason that I think resonates with legislators is that fact that the laws propose sacrifice the hard earned equity earned by the vast majority of franchisees for the potential (and I don't agree there is any real potential) benefit of a very small minority of franchisees. I think that is the overriding reason. The proposed laws simply are counter productive for the franchise systems and most franchisees.

Add to that the clear Federal and possible constitutional questions these laws raise, I think legislators simply understand that the opponents facts and positions are on very solid ground.

It really is as simple as that.

Michael Seid. (Having some problems being overseas signing on for some reason)

Primary Reason

Michael, I would say you've encapsulated the issue quite well

Seid has no backup

Michael has no backup to claim that the Maine legislation would have impacted franchisee equity. None whatever. This is 1950s style rhetoric that IFA has used for the last 50 years. Franchisos dont give a rats ass about franchisee.

No Seid response

No surprise, but now clear that Seid has no response to this question. Michael cant quantify franchisee equity and his comments are similar to a moose bellowing in Maine.

Oh, sorry Michael, that must have been you bellowing about horsemeat at the Maine hearing and defaming Burger King.

Lesson from Maine?

The Bill Passed the Maine House of Representatives!

That fact makes most of your points mute!

Lesson from Maine

In many cases, a legislator will vote in favor of a bill knowing full well there is little chance of success, however, their vote will satisfy constituents. I doubt that the pols in Maine weren't surprised by the senate vote. In any case the bill failed. BTW, the word is moot not mute.

It also works the other way

Pols also vote against for and against bills to satisfy constituents, slates or political opponents. You can't have it both ways.

It passed the house, that means 70 legislators voted for it. That is the first time a franchise relationship law has passed a State House of Representatives in 20 years. That's actually a pretty good indication that your reasons for "failure" are nothing more than wishful thinking.

Local politics are complicated and most people like yourself who claim to know why legislation failed or passed don't have a clue what really happened. Sometimes the pols and lobbyists themselves don't know what really happened, each side will have it's own take.

The one thing I've noticed in legislative politics, very often when legislation passes one branch of government it's never dead, those bills have a way of coming back again and again.

Other way around

Don't know how active Ed Teixeira was in Maine, but his view is that the votes in favor of the legislation were high because the legislators knew the bill would eventually fail.

There are those who disagree with that view and say that the Senate vote AGAINST was far more lopsided than the true sentiment because there was an assessment that the bill would fail.

While I shall now go mute, the matter of whether Teieira is correct or has it backwards is not moot.

Franchise Legislation Always Fails

Because even struggling and failing franchisees contribute to a lively economy all the time they are trying to get to break-even status. The franchisors benefit, the banks and lenders benefit, the brokers benefit, the public benefits, the attorneys benefit, the public benefits, and government benefits. Follow the money!