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Bill passes Senate that would regulate franchise agreements

Brandon Moseley

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The Alabama state Senate passed a bill Thursday to regulate franchise agreements. Many businesses are locally owned and operated but are part of a national chain. Those contracts are generally written by the franchisor that owns the brand in their home state.

Senate Bill 129, the Protect Alabama Small Business Act, is sponsored by State Sen. Chris Elliott, R-Fairhope.

SB129 would regulate private franchise contracts by codifying them in to Alabama state law. In case of disagreement between the franchisor and franchisee, the case would have to be litigated in the Alabama Court system rather than in the state of the franchisor.

The House companion bill, HB352, is sponsored by State Rep. Connie Rowe, R-Jasper.

The Alabama business community is bitterly divided on this issue.

Dom Gentile owns Jan Pro franchises in Birmingham and Huntsville, but his contract is such that he controls the Alabama franchise rights and could franchise out to other cities in Alabama.

“I am a franchisee and a franchisor,” Gentile told the Alabama Political Reporter. “The franchise agreement allows the franchiser to protect the brand. I don’t want to sell franchises if I can’t protect the quality of the brand.”

The Alabama Franchisee Association supports the legislation and argues that franchisees need protection from unjust terminations and non-renewals without good cause, protection from unjust restrictions on sales and transfers, protecting the franchisees’ rights to pursue legal dispute with their franchisor in an Alabama Court under Alabama law and requiring that franchisors and franchisees must act in good faith and in a commercially reasonable manner.

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The International Franchise Association opposes the legislation.

“This legislation undermines the very key to franchising – a brand’s standards of safety, quality and operation. These brand standards signal to consumers they can expect the same safety, consistency and quality of a product or service regardless of the business location. By placing these brand standards at risk, SB129 and HB352 will actually hurt the majority of Alabama’s existing franchise small business owners and their customers.”

This letter was signed by more than 80 franchise brands, including Hilton, Chicken Salad Chick, The UPS Store, and McDonald’s.

“Through contact with the Alabama Franchisee Association, I learned that scores of Alabama businesses — both small and large — have essentially no rights and no protections,” Elliott, who is sponsoring SB129. wrote. “It has been a ‘take it or leave it’ proposition, with franchisees having to take on more and more at each contract renewal.”

“I hope state legislators listen to all franchise owners and not just a disgruntled few, and vote against HB352, the ‘Protect Alabama Small Business Act.’ The only thing Alabama small business owners like me need to be protected from is this bill,” said Daniel Morgan, the owner of Express Pros in Birmingham.

“I recently met Darrel Bush, whose family had operated the Huddle House in Wetumpka for more than 25 years,” Elliott wrote. “As the years went by, unreasonably priced building and equipment upgrades were added to the extensions of the original contract, and the Bush family had no choice but to agree to the franchisor’s demands in order to stay afloat. Ultimately, the Bush family had to shut down its franchise. Huddle House is now looking to construct a new location just down the road from the one the Bush family operated for a quarter century.”

“The legislation basically upends the franchise system,” said David Barr, the owner of 18 Alabama KFCs and Taco Bells. “If it passes, it will wrap small businesses in reams of red tape and fundamentally redefine the entire franchise model. Practices that have worked for decades will suddenly become illegal. In particular, there will be new restrictions on when – and whether – brands and small businesses can part ways. This is a huge payday for trial lawyers, who will be able to file bogus lawsuits to their heart’s content.”

The International Franchise Association points to economic analysis by FRANdata claiming that if this legislation is enacted, from 2019-2022 427 franchise businesses will not open, 4,500 jobs will not be created, and Alabama will lose $352.2 million in economic activity and that over the next 14 years, the trend: 1,141 franchise businesses will not open, 12,000 jobs will not be created, and Alabama will lose $942.1 million in economic activity — nearly a billion dollars taken from Alabama’s economy.

Gentile, a former Republican candidate for U.S. Senate, told APR that Republicans are supposed to be for small government and for less regulation.

There were 12,400 franchises operating in Alabama in 2018. 128,800 Alabamians work for a franchise, for a total 2018 payroll of $4 billion, which is up 5.4 percent from 2017. Franchises in Alabama have a total economic output of $10.2 billion. 76 percent of Alabamians have a favorable view of franchises.

SB129 was passed by the Senate on a 21 to 2 vote. It is now awaiting action by the Alabama House of Representatives.

It’s House companion bill, HB352, received a favorable report from the House Commerce and Small Business Committee. It is waiting for action by the full House of Representatives.

For coverage of the public hearing on this:

Committee considers legislation to regulate franchise agreements

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Legislature

Alabama Legislature meets under heightened health concerns

Brandon Moseley

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The Alabama House of Representatives on Tuesday gaveled in for what was supposed to be their first day back from a two-week spring break—well rested and ready to tackle the state’s pressing issues.

Instead, like everything else in American society, it was a somber event overshadowed by concerns about the coronavirus, which has killed approximately two dozen Alabamians in just the last few days.

Speaker of the House Mac McCutcheon, R-Monrovia, thanked all the members present for attending under the circumstances.

The House called just enough legislators to have a quorum. A bipartisan group of 53 of the 105 Representatives was present in the House Chamber to gavel in for the short session.

Others were in their cars in the parking lot if needed. The leadership had asked that anybody who felt sick at all not to attend. They also directed more vulnerable members to not attend. Despite this, Reps. Steve McMillan, R-Gulf Shores, age 78; Joe Faust, R-Fairhope, age 79; and Laura Hall, D-Huntsville, age 77, were among other older representatives who braved the risks and were in the chamber anyway.

Members of the legislature all had their temperatures checked as they entered the building to make sure that none of them had a fever. While a cough and a fever are strong indications of COVID-19, about a fifth of people infected with the novel coronavirus are asymptomatic.

They can still spread the virus to others despite feeling fine. At least six members were wearing surgical masks and several were wearing gloves. One Republican member wore a face scarf wrapped around her head covering everything but her eyes.

If there had not been a quorum present for a scheduled legislative day that would have, by rule, ended the 2020 legislative session. Their attendance in Montgomery, despite the clear and present danger of the coronavirus, saved the session.

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While there, they passed a Joint Senate Resolution changing the legislative rules so that during a state of emergency, as we have now, if on a scheduled legislative day they are unable to reach a quorum, then the leadership can set a new legislative day without losing one of their thirty legislative days.

The House set its next legislative day for April 28.

They saved the 2020 legislative session, but it may still be a hollow victory.

The Alabama Political Reporter asked McCutcheon if they are able to come back and have legislative meetings, will there still be committee meetings or will that be done by e-meetings online, and if so will there be a way for the press to participate in those online discussions?

“If we come back to conduct legislative business, there will be committee meetings and we would have no reason to keep the press out,” McCutcheon said.

But McCutcheon said that they will not come back if doing so will risk the members or their health and the other people in the building.

McCutcheon himself is in his mid-60s and has suffered from a heart condition. Pre-existing conditions like cardio-vascular disease greatly increases the likelihood of death with COVID-19.

The Alabama Political Reporter asked, given what we think is coming, is there any discussion about passing legislation so that the Alabama Department of Corrections can release its oldest and most vulnerable inmates so they can get healthcare from Medicare or Medicaid rather than from the prisons health system?

“There have been no discussions about that,” McCutcheon said.

State Senate President Pro Tem Del Marsh, R-Anniston, told reporters that the Legislature would pass “two bare-bones budgets.”

McCutcheon agreed with that but cautioned, “We want to see what kind of federal money is coming down.”

McCutcheon said that when the Legislature comes back, they will prioritize supplemental appropriations bills, the budgets, the education budget and members’ local bills. They would also prioritize economic growth bills. Priority will be given to bills that have already passed the House or the Senate.

“We will look at the time we have available,” McCutcheon said.

APR asked: Given what we think is coming we are going to need every nurse that we can get. Is there plans to work with the nursing schools and colleges to ramp up the training of the nursing students we already have in the pipeline to get them trained and out on the front lines?

McCutcheon said that there has been no discussion about changing the curriculum or the course of study for nurses, but “I do know that when we look at workforce development, we have recognized that there is a nursing shortage. They are looking at ways to increase that number.”

Associated Press reporter Kim Chandler asked if the Legislature would look at increasing the length of time that an unemployed person can receive unemployment compensation.

“I am not against looking at that,” McCutcheon said.

McCutcheon said that under the circumstances that, “We may have to look at ways to reassess the timeline,” on building new prisons but warned that the state will have to speak to the Department of Justice.

Passing sentencing reform and efforts to reduce recidivism “will depend on how much time we have left,” he said.

McCutcheon said that there is a possibility that the Governor will have to call a special session over the summer and if they had not met on Tuesday then there would have been a special session.

“The members are concerned about their districts,” McCutcheon said. “The governor is now having weekly conference calls with legislators.”

McCutcheon said that the leadership will be monitoring the situation and, “We may be in a position where we can not” go back into session.

The Alabama Senate had a similar meeting on Tuesday to change the rules and set April 28 as their next meeting day.

The Alabama Legislature must constitutionally pass the two budgets and conclude their legislative business by May 18.

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Governor

Legislature returns to a much different Statehouse

Brandon Moseley

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The Alabama Legislature will return from their spring break vacation Tuesday, but nothing is the same as it was two weeks ago.

Monday, the press was informed that the corps will be removed from the press rooms behind the chambers. Those rooms are being given to the legislators so that they can sit the necessary six feet apart. The press will move to the gallery looking down on the House Chambers. That will be our space exclusively as the public and the lobbyists are barred. The additional space will allow members of the press to also stay a minimum of six feet apart to avoid transmission of the coronavirus.

The Alabama Political Reporter asked if we would still have access to the fifth-floor lobby where citizens and lobbyists regularly met with members of the legislature who stepped off of the House floor. APR was told that we would not have access to any part of the fifth floor except by appointment and that extended to the entire Statehouse building.

Legislators were told in a conference call that if they feel sick, are showing symptoms of anything that they should just stay away from today’s meeting which is not essential. Legislators will gavel in and set April 17 as their next meeting date.

The reason they have to gavel in is that if they do not the session would automatically end and the constitutionally mandated budgets for the 2021 fiscal year beginning on October 1 have not been passed yet.

State Rep. Tim Wadsworth, R-Arley, said that the legislator spoke with Gov. Kay Ivey and her team as well as legislative leaders.

Wadsworth said that they were told that conference calls are helpful and that members will receive a letter detailing the procedures to be followed by the members for the rest of this legislative year. There will be no visitors in the State House and all voting will be by voice so there will be no touching of voting machines.

The governor was to participate in a conference call with President Donald Trump and Vice President Mike Pence later that day.

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Ivey told them that Alabama will test for counterfeit supplies and watch for coronavirus scams and that the state will have an advance web site operating later this week. The state is, “Working with various Alabama companies to manufacture and produce various medical safety products.”

Wadsworth said that they were told that the state had had 831 confirmed cases of COVID-19 and 15 reported deaths, though not all had been confirmed by the Alabama Department of Public Health, by that morning and that there were over 2500 deaths already in the United States.

Wadsworth said that the subject of hospitals came up. Hospitals are looking at expanding their ICU (intensive care unit) areas to deal with the demand for intensive care beds by COVID-19 patients. Hospital rooms are freeing up due to the elimination of elective procedures.

Wadsworth said also that the Apple Company, through President Tim Cook, is delivered 100,000 N-95 masks and surgical masks, the schools will not reopen physically this year, and teachers, workers and aides will practice social distancing when they go back into the school buildings on April 6,

Wadsworth said that State Superintendent Eric Mackey told them that the focus will be on graduating and getting students ready for this year. The State Board of Education building is being cleaned.

Legislators were informed that the Alabama National Guard is ready for when they are needed.

Wadsworth said that they were told that teletherapy will be used for mental health patients except for extreme patients. A 24/7 mental health help telephone lines available and that mental health patients are only being discharged when teletherapy is available at home.

Wadsworth said that State Finance Director Kelly Butler assured them that, “All vendors are being paid.” In the first six months of the fiscal year revenue held up good; but that he anticipates a decline though in revenues for the last six months of the current fiscal year. Butler did not anticipate calling for proration due to the strong first six months of the year. $300 million is being moved from the stabilization fund to the education trust fund (ETF) to ensure stable budget.

The 2020 Legislative Session will end by May 18.

 

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Governor

State ramping up for COVID-19 fight

Brandon Moseley and Nicole Jones

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Alabama Gov. Kay Ivey, State Health Officer Scott Harris, Commerce Secretary Greg Canfield, Public Health Commissioner Lynn Beshear and Alabama National Guard Major General Sheryl Gordon briefed state legislators Monday about how the state intends to address the looming wave of COVID-19 cases as the virus spread across the state of Alabama virtually unchecked.

Ivey said that the U.S. Army Corps of Engineers has a team in the Montgomery area currently visiting the six major metro areas in our state studying existing facilities that can be used to provide additional hospital beds. The new hospitals would be in the greater Huntsville, Birmingham, Montgomery, Mobile, Tuscaloosa and Auburn areas.

U.S. Army Major General Diana Holland, who commands the South Atlantic Division of the U.S. Army Corps of Engineers, will be working with the Alabama Department of Public Health on this effort and will provide a report on their findings later this week.

It was explained that hotels provide the easiest conversion to hospitals as they already have bathrooms connected to each room and are built to handle large numbers of guests and staff.

Harris told the legislators that there were 831 cases of COVID-19 in Alabama as Monday morning, that number has risen now to nearly 1,000, and that there already have been 15 deaths reported, though the ADPH has publicly acknowledged 13 because not all have been officially investigated yet. The United States is up to 2,500 deaths nationwide.

Harris said that clinics are opening in Macon and Dallas counties on Monday, in Wilcox County Wednesday, and Houston on Thursday to provide more testing in the Wiregrass and Blackbelt. There are now 30 pop-up sites in these areas.

Harris said that hospitals are using available space to add additional ICU areas and that hospital unnecessary capacity has been diminished due to a recent health order prohibiting elective procedures.

Harris said that the ADPH has received its third and final shipment of personal protection equipment from our strategic national stockpile allocation. A certain amount of that is going to hotspot hospitals in crisis right now using the same formula based on the size and reported needs of the counties.

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Canfield said that his Department is working diligently to identify companies across Alabama that can manufacture PPE or who can quickly learn how to make the items we are most in need of. Canfield said that they have identified 30 companies so far.

Gordon said that the Alabama National Guard is assisting with logistics and warehousing of vital supplies. The Guard’s 12,000 soldiers and airmen are ready to serve. Gordon said that the Guard is abiding by CDC guidelines for the safety of the soldiers and airmen.

State Finance Director Kelly Butler said that his Department’s goal is to continue operations with social distancing and ensure that payments are made to health providers, Medicaid, and vendors that provide services.

Butler said that they implemented plans that allow them to do remote work with employees working at home continuing to process payments and transactions. “All vendors are being paid,” Butler said.

Butler warned that the revenues that are coming in for the 2020 budget will decline; but we have not seen a decline in the first six months of the fiscal year.

“We think that March receipts are based on February economic activity and expect to see sales and income tax decline in April’s numbers,” Butler said.

Butler said that because of the strong first six months, we do not expect to call for proration in the remainder of this fiscal year, which ends on Sept. 30.

Ivey included changes to normal purchasing rules so Alabama can acquire the PPE we need.

Beshear said that the community mental health centers are using telemedicine. Home visits are required only in extreme cases.

President Donald Trump has extended his social distancing order to 30 April, Ivey said.

“Remember the 6-foot rule,” she said.

The U.S. is confronted with an unparalleled health threat.

On Sunday, noted Trump coronavirus task force member Dr. Anthony Fauci told CNN’s Jake Tapper that a lot of Americans are going to die.

“I mean, looking at what we’re seeing now, I would say between 100,000 and 200,000,” Fauci said. “We’re going to have millions of cases.”

 

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House

Alabama Legislature plans to return to work briefly March 31

Eddie Burkhalter

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The Alabama Senate is planning to get to only a few big, constitutionally mandated items before calling an end to the year’s legislative session amid the COVID-19 pandemic, but whether they’ll get those tasks accomplished remains to be seen. 

Senate leadership is advising lawmakers who fall into “at-risk” categories because of their age or pre-existing medical conditions to not attend the Senate’s meeting when it resumes.

Among the items legislators tentatively plan to tackle before gaveling the session closed sometime in the future are the passage of the Education Trust Fund budget and the General Fund budget, which is the Legislature’s only constitutionally mandated duty.

And “other bills deemed necessary.” 

The state Senate’s Plan of Action, obtained by APR Friday, states that the Senate will meet at 2 p.m. on March 31 for its 14th legislative day. 

“The intent for this legislative day is to advance only essential attendance items and then to adjourn to a date certain for the 15th Legislative Day. April 28 has been discussed with the House,” the plan reads. 

The State Senate’s plan: 

“As leaders, it is imperative that we demonstrate that the business of this state carries on in an orderly and systematic fashion while adhering to the recommendations of our public health officials.

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The Alabama Senate will meet on Tuesday, March 31 at 2:00 pm at the Statehouse in the Senate Chamber as scheduled. This will be the 14th Legislative Day.

The intent for this legislative day is to advance only essential attendance items and then to adjourn to a date certain for the 15th Legislative Day. April 28 has been discussed with the House.

Below is a draft agenda for Tuesday, March 31.

  • Gavel In
  • Pledge and Prayer
  • Roll Call
  • Excuse all Senators
  • Points of Personal Privilege
  • President Pro Tem Marsh
  • Majority Leader Reed
  • Minority Leader Singleton
  • Adjourn to date certain for 15th Legislative Day.

“It is highly recommended that any Senator that falls into any of the at-risk categories stay away from the March 31 Legislative Day,” the plan advises. “However, each Senator’s personal wish will be accommodated.”

Any Senator or staff member that is ill, has been ill, or has been in the same room of anyone that has had any symptom of illness in the 72 hours preceding the March 31 Legislative Day must stay away from the March 31 Legislative Day, according to the Senate’s leadership.

A disinfecting station will be provided under the canopy of the second-floor rear entrance for each senator to disinfect hands and cell phones as they enter the State House and as they leave the Statehouse.

“We must ensure that we practice all Health Department recommendations while at the Statehouse,” the plan reads.

Social distancing will be accomplished by having senators report to their offices by 1:45 p.m. They will then walk into the chamber as the roll is called and then go back to their offices.

“As much separation as possible is required therefore greetings must be verbal only from a distance of 6 feet or greater,” the plan reads.

The remainder of the session will be held possibly Tuesday, April 28 through Monday, May 18.

This timeframe includes three weeks of the session plus the last day of May 18.

A specific plan for meeting more days than normal will be developed and provided prior to the next legislative meeting date.

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