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The Lesson from Maine on Franchisee Protection Legislation

by Ed Teixeira

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 mainstream. In my opinion the message regarding this type of proposed legislation is clear and 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 success remains remote.

Here are Ten Reasons Why:

  1. Itís 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.
  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 too many issues to deal with ranging from budget deficits to job creation to deal with franchise legislation.
  5. The franchise industry is already regulated by the FTC with disclosure requirements most state legislators would accept this oversight as adequate.
  6. Remedies for aggrieved franchisees already exist through the courts and judicial system.
  7. Reluctance on the part of states to introduce any legislation that could be perceived as job killing. The risks far outweighs 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.
  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.


© 2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com



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