The Massachusetts Joint Committee on Community Development and Small Business held a hearing on December 12th, on S. 73, misleadingly titled “An Act Protecting Small Business Investments”. The bill contains strict new regulations on franchise contracts and introduces vague new language that would burden the courts with frivolous litigation. A panel led by IFA testified before the committee. The panel, which included a franchisee, a franchisor, and a supplier expert, explained the negative effects that additional government interference would have on already complex franchise relationships.
This legislation, like many others, opens up a Pandora’s Box of ambiguity in contract terms that threaten the basic and proven tenets of the franchise business model, which is all about maintaining the brand, and would leave both the franchisee and the franchisor liable for potential litigation down the road.
The result? More franchisors and franchisees will be fighting lawsuits versus working together to grow their businesses, add jobs and make the U.S. economy stronger. Meanwhile, consumers would have a less consistent experience at franchise locations.
Read the facts: