The Future Of Franchise Laws

What's Missing From Existing Legislation?

FZ: What should franchising legislation focus on that's not already out there?

Kaufmann: I would love to see federal franchise legislation that preempts and, through preemption, negates all existing state franchise relationship laws. The state franchise relationship laws, like the proposed Small Business Franchise Act, are pernicious in their impact upon the logical and profitable operation of franchise networks, both to the franchisor in question and all its franchisees.

Kezios: What is not in Coble-Conyers that should be is something we couldn't get the Democrats or the Republicans to agree on: renewal. When you buy the franchise today and you sign the contract, you ask the franchisor "What happens at the end of the 10 years?" They say "Oh, don't worry. We'll renew you." What they don't tell you is you're not going to be able to sign the exact same contract in 10 years.

Kaufmann: I don't think there's any confusion in the franchise arena, whether by franchisors or franchisees, that at the time of renewal the contractual relationship, and from time to time the franchise system itself, has to be recalibrated to take into account changed consumer preferences, changed demographics, new technologies, new political realities and other developments that have occurred in the years since the original franchise agreement was entered into. We all know, and Susan and those she represents know it as well, that franchise renewal merely means the execution of a new franchise agreement, not the identical franchise agreement that was entered into originally.

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