Fair Franchise Practices Bill: Transfer of Franchise System
(UnhappyFranchisee.Com) Among other things, proposed PA House Bill 1620 (Fair Franchise Practices Bill) states “A franchisor may transfer its interest in a franchise to an entity with the business experience and financial means to perform all of the franchisor’s obligations in the ordinary course of business.”
It states:
§ 917. Transfer of franchise system.
(a) Authority.–
(1) A franchisor may transfer its interest in a franchise to an entity with the business experience and financial means to perform all of the franchisor’s obligations in the ordinary course of business.
(2) A franchisor must provide at least 30 days’ advance notice to every franchisee of the intent to transfer its interest in the franchise. The notice must be accompanied by a complete description of the business and financial terms of the proposed transfer or transfers.
(b) Assignment.–If a franchisor transfers all or a major portion of the franchise system to another person, all of the
following apply:
(1) The transferee shall:
(i) assume the franchisor’s obligations to the franchisee; or
(ii) renegotiate in good faith the franchisor’s obligations to the franchisee.
(2) The transferee shall be liable for the obligations of the franchisor.
(c) Noncompliance.–If a transferee fails to comply with subsection (b)(1), the franchisee may rescind the franchise
contract if the franchisee:
(1) ceases from using the franchisor’s trademarks, logotypes and other express identification; and
(2) alters the appearance of the premises and the manner of operation of the franchised business to avoid the likelihood of confusion as to the affiliation of the business with the franchise system.
What do you think of the Transfer of the Franchise System provision of the proposed PA House Bill 1620 (Fair Franchise Practices Bill)?
Do you believe that making this provision law will be good for franchising?
Why or why not? Please share a comment below.
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