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.
Nebraska Franchise Practices Act Amendment
Proposed legislation in Nebraska would amend the state’s Franchise Practices Act to provide that a franchisee shall not be deemed an “employee” under Nebraska law, so long as the franchisee is a party to a franchise agreement that is in compliance with the Federal Trade Commission’s Franchise Rule. As reported in earlier versions of SGR’s Franchise Newsletter, similar legislation has been enacted or introduced in other states, including Georgia. Such legislation is largely considered a response to recent court cases in which franchisees’ employees have attempted, sometimes successfully, to hold franchisors liable for workers’ compensation benefits.