Vermont Franchise Relationship/Termination Legislation

Vermont legislators have proposed a new franchising relationship and termination law. Among other things, House Bill 694 would: 1) prohibit a franchisor from terminating a franchise prior to the expiration of its term except for “good cause”; 2) impose a duty of good faith on parties to a franchise agreement; 3) and prohibit restrictions on a franchisee’s right to associate with other franchisees. The legislation also includes provisions regulating the transfer and sale of franchises, encroachment, and sources of goods or services.

The bill’s definition of a “franchise” is similar to the definition found in other state statutes. Among other things, machinery dealerships, motor vehicle manufacturers, service station operators, oil companies, and alcoholic beverage companies are specifically excluded from the law’s definition of a “franchise.” The bill was referred to the Commerce and Economic Development Committee on January 31, 2012. We are aware of no action on the bill since that time.

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