Law Review

Congress considers franchise legislation...again.
This story first appeared in the June 1998 issue of Entrepreneur. To receive the magazine, click here to subscribe.

Hoping that 1998 would bring the congressional interest needed to finally pass franchise legislation, Rep. John LaFalce (D-NY) introduced the Federal Fair Franchise Act of 1997 (H.R. 2954) last December. To his advantage, LaFalce's recent appointment as the Ranking Minority Member of the House Committee on Banking and Financial Services gives him more congressional power than did his previous position as head of the Small Business Committee.

The new bill is a revised version of three previous LaFalce bills: It focuses on good faith, prohibition of fraud and discrimination, restriction of the terms of franchisee termination, and the authorization of both private enforcement and state action to force compliance.

"Sticking with a bare-bones approach may expedite consideration by Congress, but even more, it may stir states that either have no law or want to expand on the one they have," explains attorney Harold Brown of franchise law firm Harold Brown & Associates in Boston. If passed, the bill would not preempt existing state laws. Instead, says Brown, "The bill would fill the gaps and make the field level for franchisors who are already complying with these standards."

Even if this latest attempt at franchise legislation flounders like its predecessors, Brown believes if it inspires any of the 32 states without franchise laws to enact their own legislation, LaFalce's efforts will not have been wasted.

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