Blue Mau Mau: Maine Senate Kills Franchise Protection Bill
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AUGUSTA, Maine – On Wednesday Maine’s state senate voted against Legislative Document 1458, the Small Business Investment Protection Act. In a vote of 24 against and only 10 supporting, the senators essentially killed the current form of the bill.
Franchise owners in Maine have complained that their businesses are being stolen or abused by franchisors. They say that under the act, franchisors would be required to provide a 60-day period for a Maine franchise owner to cure a problem before the franchise is terminated by the franchisor. Franchisors prefer the current arrangement where they can terminate a franchise on the spot. The bill would also allow franchisees to leave their business to their spouse, child or chosen successor. Franchisors want to keep their current right to sell the expiring franchise to whomever they want.
“I’ve devoted a year and a half to this,” said one of the bill’s co-sponsors, state senator John Patrick, D-Rumford. “I believe this is the right thing to do at the right time.”
State senator Andre Cushing, R-Hampden, was concerned about having the state government use its heavy hand to intervene in business contracts. Some lawmakers hoped that franchisors would take an opportunity to hammer out a solution. “Sometimes you have to let them sort things out for themselves,” said Sen. Cushing.
But Senator Troy Jackson, D-Allagash, disagreed. “There is no place to have those issues rectified, that’s why they [Maine franchise owners] are coming to legislature today,” he retorted in support of franchise protection and alluding to one-sided contracts controlled by franchisors. He had wanted the franchisor lobbying group to sit down to negotiate parts of the bill with franchisees, but emphasized that the franchisor group was entrenched in their opposition to all parts of the franchisee protection bill.
Senator John Cleveland, D-Auburn, opposed the bill, wanting a further study into the issue. “It is not clear what the harm being done is,” the senator commented to colleagues. He wanted to see just how much franchisee abuse actually takes place in Maine, its impact on consumers and what solutions would be best.
In the end, although the Small Business Investment Protection Act was approved by Maine’s house of representatives, it failed by a large margin in the senate.
“I think the reality of Maine is that the facts were on our side,” said Matthew Haller, vice president of government affairs for the Washington D.C.-based International Franchise Association.
Supporters of the Small Business Investment Protection Act have told Blue MauMau that they counted over 35 lobbyists marching up and down the legislative halls to oppose the bill. That’s in a state with only 1.3 million residents and 35 senators. When asked if there was any truth to those rumors or that the IFA had spent over $600,000 lobbying against the bill, the association did not respond.
Jim Coen, executive director of the Maine Franchise Owners Association (MFOA), wrote state senators earlier in the week that his organization “will not quit working towards further balancing franchising to protect franchise owners from having their equity extorted, stolen or extracted by unfair dealing franchisors.” Coen was quick to point out that franchisees who felt their assets were safe could be a boon to Maine and its economy. “I believe franchising has barely scratched the surface of its potential. Equity protection measures for Maine franchise owners will bring many more buyers into the mix. I am looking forward to those days,” said the local association leader.
“It’s pretty clear the MFOA was never able to make a case that the issues they raised were prevalent within the industry in Maine or necessitated a legislative solution,” stated the IFA’s Mr. Haller. “Making emotional arguments is enough to get a bill introduced, but not turned into law.”
Haller said he applauded Maine’s senators for recognizing that the franchisee protection bill was a solution in search of a franchisee problem that really doesn’t exist. He added that the bill was being promulgated by a small vocal minority who sought to distort reality for their own self-interests. The IFA’s government affairs VP declared that it was a good day for Maine. “This decision ensures franchise businesses can continue to operate without unnecessary government intrusion into private contracts, consumers will continue to receive products and services from Maine’s 3,600 franchise businesses and prospective franchisees will be able to invest in new franchises in Maine.”