Fair Franchise Practices Bill: Good Faith & Fair Dealing

Proposed PA House Bill 1620 (Fair Franchise Practices Bill) calls for each party in the franchise relationship (franchisor and franchisee) to “act in good faith in [the] performance and enforcement of the franchise contract.

It states:

§ 905. Good faith and fair dealing.

(a) Good faith.–

(1) A franchise contract imposes on each party a duty to act in good faith in its performance and enforcement.

The duty under this paragraph:

(i) prohibits each party to the franchise from taking action which will have the effect of destroying or injuring the right of the other party to receive the full expected benefits of the contract; and

(ii) obligates each party to the franchise to do everything required under the contract to accomplish the purpose.

(2) An action which prevents enjoyment, even if not prohibited by the express terms of the contract, is prohibited.

(b) Fair dealing.–Franchisors and franchisees shall act in a fair equitable manner toward each other so as to guarantee freedom from wrongfulness, arbitrariness, coercion and duress by the other party.

What do you think of the Good Faith & Fair Dealing 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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TAGS: Good Faith & Fair Dealing, franchise legislation, PA House Bill 1620, PA Responsible Franchise Practices Bill, Fair Franchising Legislation, Franchise laws, Pennsylvania State Rep. Peter Daley