Franchise Encroachment, Part 2

Wrapping Up

The dispute over the issue of encroachment isn't going to be settled any time soon. House Resolution 3308 introduced by Rep. Howard Coble (R-NC) and Rep. John Conyers (D-MI)-which would micromanage the nation's franchise relationships, including encroachment-has been introduced in Congress and has nearly 50 co-sponsors, although a few who previously were sponsors have distanced themselves from the proposed legislation.

While it's not likely to pass this year, some form of H.R. 3308 will probably re-emerge next year. It's supported by the American Franchisee Association, a national trade association of franchisees and dealers with more than 16,000 members, which will push hard for its passage. Those opposed, including the U.S. Chamber of Commerce, the National Association of Manufacturers, the Small Business Survival Committee, the National Franchise Council and the International Franchise Association, will battle just as hard for its defeat.

What's most interesting in the debate over H.R. 3308 and government-established encroachment criteria is that franchisee support for protective legislation is not universal. Recently, the Franchisee Advisory Council of the International Franchise Association (an association representing more than 30,000 franchisees operating in more than 70 different industries) came out in opposition to the proposed legislation.

Stay tuned to see how this debate turns out.

Franchisee Encroachment: Do you think franchisors should be restricted from building additional locations within a certain proximity to existing franchisees?

Because franchises compete with nonfranchises (The Coffee Beanery vs. Starbucks, Alphagraphics vs. Kinkos), if the government dictates the distance between franchised locations, should it also dictate distance between nonfranchised locations so the two types are affected equally?

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