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Franchisors declare victory

Brandon Moseley

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The Alabama legislature has come and gone and the House of Representatives never took up either HB353 or SB129, the so-called “Protect Alabama Small Business Act.”

Wednesday, the International Franchise Association (IFA) applauded the Alabama House of Representatives for opposing HB352/SB129) in the Alabama Legislature.

The IFA said that the legislation sought to codify franchise contracts into Alabama state law, which would increase regulation on small business owners, reduce franchisee equity, and damage brand standards and public safety.

“The ‘Protect Alabama Small Business Act’ was the most harmful franchise-related legislation ever proposed in any state,” said IFA Senior Vice President of Government Relations and Public Affairs Matt Haller. “Its defeat is a sign that Alabama remains open for business. IFA and Alabama’s 12,000 franchise businesses thank the Alabama House of Representatives for their opposition to this bill.”

The IFA said that an analysis by market research firm FRANdata estimated that this legislation would have prevented more than 1,100 franchise units from opening and 12,000 jobs from being filled. Their analysis also showed that Alabama franchise growth would lag behind neighboring states while costing the state’s economy nearly $1 billion, if this had passed.
More than 80 franchise brands, including Hilton, Chicken Salad Chick, The UPS Store, and McDonald’s opposed the bill.

SB129 was sponsored by State Senator Chris Elliott (R-Fairhope)

“The Protect Small Businesses Act will create the level playing field that small business owners – particularly, our small franchisee owners ­– desperately need,” Elliott wrote. “The bill provides three things: Protection from unjust terminations and non-renewals without good cause. Franchisees should be compensated for fair market value for their investments. Protection from unjust restrictions on sales and transfers. Most importantly, the bill protects the right to sue in Alabama courts. Often, franchisors construct contracts that only allow for disputes to be settled in courts in New York City or Los Angles, where court costs and attorney’s fees are prohibitively expensive for small business owners in Alabama. If you’re 25 years old and working 80 hours a week to make your first Taco Bell franchisee profitable, you don’t have the time or money to battle Big Law hired-guns in a lower Manhattan courtroom, if a contract dispute arises.”

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The Alabama Senate passed SB129; but the House never considered it or the House version, HB352, which was sponsored by State Representative Connie Rowe (R-Jasper).

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Many members of the business community spoke on both sides of this issue at the public hearings.

For the legislature to consider the issue again, new legislation would have to be introduced in the 2020 regular legislative session.

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