The International Franchise Association an opponent of franchise-protection legislation argue that franchising is already a “highly regulated industry.”
This contention seems highly suspect considering the many blatant stories of franchise abuse by shady companies that violate franchise disclosure laws with impunity, and established franchisors who seem to hold all the cards in the franchise relationship.
UnhappyFranchisee.com asked some of the nation’s top franchisee attorneys: “Is Franchising Highly Regulated?”
Here are some of there comments: (to read more click here)
Cary Ichter – “There is, for all practical purposes, no franchise regulation on the Federal level because the FTC has nullified its own regulations through its lack of enforcement and by not allowing for a private right of action… even when its regulations have been clearly violated.
“Regulations having to do with selling franchises typically come from the FTC Franchise Rule and the FTC apparently doesn’t have the resources to enforce that rule, or even go after franchises that are out there pulling some sort of scam. The FTC, as far as I can tell, doesn’t do much of anything to enforce franchising regulations.”
Peter C. Lagarias – ”When the International Franchise Association and franchisors complain of excessive regulation in franchising, they should be firmly corrected. Repeatedly asserting a position does not make it so. And while everyone is entitled to their own opinions, everyone is not entitled to their own facts. The facts are that franchise laws do not cover the bulk of the three core areas of franchise relationships:
1. the initial period involving sale of franchises;, 2. the franchise relationship during its term, and, 3. the end of the relationship via termination, non-renewal or transfers.”
Louis A. Sousa –”Laws are in place but the protections do not go far enough to protect franchisee’s interests. Repeated attempts to balance them in the legislative process are vigorously fought by the franchisors. For example, few states have laws requiring a franchisor to renew a franchise agreement at its expiration, stripping an otherwise compliant franchisee of value as term expires. Few state laws restrict termination of a franchise agreement to good cause shown. Within the last decade Rhode Island’s legislature passed a law expanding franchisee rights and the franchisor lobby immediately descended upon the state house resulting in a substantial withering of the statute.”
After reading this study I can say franchisers are having tough time managing with all laws so far!! It’s true because of such franchise process sports and others business aspects has got a new way of earning. So I hope franchiser’s will be in the limit of franchising law.