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Alabama Fair Franchise Legislation Stalls

Posted on Date: Jun 25, 2019

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What looked like the surprise franchise legislative effort for the year quickly stalled and is now on hold until next year.  State Senator Chris Elliott introduced Senate Bill 129, the Protect Alabama Small Business Act, to specifically create protections for franchise owners in the state. The bill concentrated on the rights to association, termination rights, transfer rights, advertising fund rights and transparency, and protecting franchisee equity. To put it into context as to why Senator Elliott was interested, he was previously a ServiceMaster franchisee and witnessed firsthand how changes in leadership can change everything in a franchised brand. Soon afterward, a companion bill was introduced in the House, House Bill 352, by Representative Connie Rowe.  Franchisees in Alabama need to acknowledge the efforts these two lawmakers made on their behalf.

SB129 had its first test in the Senate, passing committee, then passing the Senate on a floor vote of 20-1. It was then sent to the House. In the House, both bills were held up by the Speaker. Seems the opposition had hired a lobbyist that had close ties to the Speaker. Next, the primary opposition, the International Franchise Association (IFA), had its chair, David Barr pen an op-ed in the Wall Street Journal against the legislation, claiming it was the work of unions to wreak havoc on the franchise business model. Nothing could be further from the truth. David Barr lied on behalf of the IFA, all while claiming to represent franchise owners. Unfortunately, it created doubt in an extremely conservative state, and the legislative session ended without the bills advancing.

Which gets to the reason why this is being written, and why franchise owners need to be concerned. The claim that the IFA represents franchise owners, put bluntly, is fraudulent. They have franchisees that are members of the IFA, they even have a Franchisee Forum, but the reality is that these franchisees are put there by their franchisor. There’s no other way to describe it except that they are franchisee representatives of their franchisors. Complicating it more is the fact that David Barr is technically a franchisee, however, he is also a franchisor and sits on multiple franchisor boards. In his position as IFA chair, he was elected into that position by the IFA board, which is by an overwhelming majority, franchisor based. So, the question is, do you want your interests represented by those serving on behalf, and currying favor from, their franchisor, or those that have been elected by their fellow franchisees, with no conflicted interests? It is, of course, a rhetorical question.

So, what can franchisees do? They need to quit being silent on the issues, and they need to quit being afraid to meet with elected representatives. Franchisees reside in every state and federal district in the country. If you don’t think you can make a difference, think what would happen if 10,000 franchisees called Capitol Hill on a single day on an issue.  Sounds impossible, doesn’t it, but that’s approximately how many Subway franchisees are in the country, just a single brand. The key is for all franchisees, from all brands, to speak up. If you want to learn more and how to engage franchisees in the legislative process, attend the AAFD’s Leadership Summit and Annual Meeting where there will be sessions on protecting franchisee equity, including through legislation.

Don’t let the franchisor-controlled IFA represent you! Don’t let Alabama happen again! We need to take the lessons learned to inspire us to join together and pass legislation state by state and federally to protect our investments.  After all, it is the franchise owners that invest, employ, support, and pay taxes in every district across this county.

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