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Pennsylvania Franchise Law Still Pending

Pennsylvania franchise lawIn 2013, Pennsylvania State Representative Peter J. Daley proposed House Bill 1620, also known as the Responsible Franchise Practices Bill, which would be the first Pennsylvania franchise law.

The Responsible Franchise Practices Bill would provide the framework for fair, equitable and responsible franchise practices in Pennsylvania.  Daley believes that the current franchise laws do not do offer enough protection to protect franchisees from unfair practices involving the sale and operation of the franchise, according to a June 2015 Memorandum.

The Responsible Franchise Practices Bill would make franchise agreements fairer to franchisees by:

  • Eliminating “arbitrariness, coercion, and duress” by posing limitations on a franchisor’s rights to terminate a franchise agreement
  • Limiting a franchisor’s right not to renew a franchise agreement
  • Allowing franchisees previously restricted to purchase products and goods through the franchisor to purchase products through an approved source
  • Restricting the franchisor’s ability to contractually limit a franchisee’s rights to transfer the franchise

Currently, franchise laws are spelled out in the Franchise Disclosure Agreement, which must be made available to prospective franchisees within 14 days of signing the agreement, according to Entrepreneur. Some franchisors, such as 1000 Degrees Neapolitan Pizza make the requirements and restrictions easily accessible to prospective franchisees by publishing the data on a FAQ section of their website.

According to the General Assembly, The Responsible Franchise Practices Bill was re-referred referred to the Consumer Affairs Division of the Pennsylvania legislature in October 2015 and the Pennsylvania franchise law is still pending.

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