Florida Senate Bill 750 has taken one step closer to becoming law. Known as The Protect Florida Small Business Act, Florida Senate Bill 750 would greatly impact both franchisors and franchisees doing business in Florida. Senate Bill 750 would change the current law in Florida to protect franchisors from terminating or failing to renew a franchisee’s business without legitimate reason. Currently, franchisors do not need a reason or to provide warning before terminating or failing to renew a franchise in Florida.
RATIONALE FOR THE NEW LAW
In an article in BlueMauMau.org, Don Sniegowski recently reported on this new Florida bill, mentioning a husband and wife who owned a franchise together. The wife was the primary signer of the franchise agreement, but the husband also signed and the franchise was owned by a separate legal entity. The wife became ill and the husband stepped up his responsibilities with the business to take on her duties. However, the national franchisor only recognized the wife as the owner of the franchise and would not agree to amend the franchise agreement or in any way recognize either the legal entity or the husband. The national franchisor considered the franchise abandoned by the wife and terminated her rights to continue to operate the business. Unfortunately, the couple lost the franchise and their investment in the business that they had built.
FLORIDA SENATE BILL 750
In a nutshell, this new legislation would prevent a franchisor from arbitrarily terminating a franchisees rights. Additionally, the Florida Senate Bill 750 would prevent a franchisor from deciding not to renew a franchisee’s agreement accept under certain circumstances. The new Bill would even require the franchisor to permit a franchisee to monetize the equity in the business under certain circumstances.
What does this mean for Florida franchisees and for franchisors with Florida franchisees? Currently, it does not mean that anything has changed. The International Franchise Association (“IFA”) is strongly opposed to Florida Senate Bill 750. The IFA is opposed to the Bill since most of its members are franchisors and Florida Senate Bill 750 would greatly limit a franchisor’s ability to freely terminate or not renew a Florida franchisee. However, the Coalition of Franchisee Associations (“CFA”) has taken a strong position favoring Florida Senate Bill 750. The CFA argues that the Bill would encourage individuals to invest in more franchises in Florida, thereby boosting Florida’s economy. As of the writing of this article, Florida Senate Bill is still a long way from becoming law and may undergo many changes before or if it ever becomes law.