Massachusetts Fair Franchise Act

The Massachusetts legislature is considering, once again, the enactment of a franchise relationship/termination statute titled the “Massachusetts Fair Franchise Act” (the “Act”).  The bill, similar to those proposed in other states such as California and Vermont, would prohibit a franchisor from terminating or cancelling a franchise, or from substantially changing the competitive circumstances of a franchise agreement without “good cause.”  Under the Act, “good cause” must be based upon legitimate business reasons, including a franchisee’s refusal or failure to comply with express obligations of the franchise agreement.

In addition to the foregoing, the Act would require that written notice of termination or nonrenewal be provided to a franchisee at least 90 days in advance, and that such termination or nonrenewal be made only for good cause.  The law would impose an inventory repurchase obligation on terminating or non-renewing franchisors, and would prohibit franchisors from restricting the right of free association among franchisees and imposing unreasonable performance standards on franchisees.  Senate Bill No. 73 was introduced to the legislature on February 15, 2013.

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