Issue 6 — New Laws and Regulations
Business Opportunities-Utah A new law in Utah increases the dollar threshold at which assisted marketing plans become subject to the state’s Business Opportunity Disclosure Act. The threshold amount has been raised from $300 to $500. House Bill No. 78 became effective May 8, 2012. Motor Vehicles-Utah Senate Bill No. 68 amends Utah’s motor vehicle dealer law to prohibit a franchisor from: 1) coercing or requiring a franchisee to establish prices at which the franchisee is required to sell certain products or services; 2) coercing or requiring a franchisee to construct a new dealer facility or materially alter or remodel an… Read more
Legislative/Policy Updates
California Assembly Tables “Fair Franchising” Bill The “Level Playing Field of Small Businesses Act” failed to gather the requisite votes to move past the California Assembly’s Business, Professions and Consumer Protections Committee. The controversial measure would have greatly extended protections to franchisees, but gathered significant opposition from franchisor groups including the International Franchise Association. While the measure will be tabled for now, we expect similar legislation to be reintroduced in the future. The bill received four votes in favor, three votes against, and two abstentions. For a summary of the proposed legislation, see the previous issue of our Franchise Law… Read more
Recent Cases — Issue 6
Franchisor’s “Lewd” Advertising Not a Breach of Franchise Agreement A federal district court in Missouri ruled that Hardee’s Food Systems, Inc., a fast food franchisor, did not breach the implied covenant of good faith and fair dealing in its agreement with a franchisee. The franchisee had alleged that two of the franchisor’s television ads were “lewd” and had resulted in lost profits and other damages to the franchisee. As evidence, the franchisee cited numerous complaints from its “predominantly agricultural and union-oriented community, about the unacceptable nature of these ads.” The relevant provision in the franchisee’s agreement stated, in part, that… Read more