Franchise owner rights bill finds little support

No N.H. franchisees testify in favor at House hearing


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What if they held a hearing for a bill of rights for franchisees and no franchisee showed up, at least to testify in favor of it?

And what if two franchisees did show up to testify, but against the bill, standing in solidarity with the franchisors that the bill was supposed to protect them against?

House Bill 1215 is aimed at trying to “strike the correct balance between the franchisee and the franchisor,” explained the bill's sponsor. Rep. Patrick Abrami, R-Stratham, to open up Tuesday’s hearing.

But there wasn’t much balance at the hearing, even though Abrami offered an amendment cutting out some of the more controversial aspects of the bill -- such as letting each franchisee set his or her own hours and prices.

Under the amended version, the bill would prevent the corporate office from terminating a franchisee's contract without good cause, offer renewal rights, allow owners to transfer the franchise to family members, prohibit discrimination and allow franchise owners freedom to associate.

Still, the bill took a pounding, and it wasn’t just from franchisors, like Dover-based Planet Fitness or Dunkin' Donuts, which is based in Massachusetts.

“This bill shifts the burden on a business owner like me, who plays by the rules,” said Gerry McGrath, who owns the Valpak franchise for New Hampshire.

Some supporters of the bill did testify, but they were representatives of associations of franchisees, like Keith Miller, chairman of the Coalition of Franchisee Associations, which has been pushing a national franchisee bill of rights in state houses around the country.

Miller, who also heads the North American Association of Subway Franchisees, did reference by name some franchisee owners, but said they were too “emotionally devastated that they can’t talk about it" in public.

Others, he said, would not speak out for fear of retaliation.

“That’s why freedom of association is so important,” he said.

Miller was followed by Edwin Shanahan, executive director of Dunkin’ Donuts Independent Franchise Owners, a coalition based in Massachusetts.

There is nothing wrong with the current corporate ownership of Dunkin', but there have been problems with it under previous ownership, and if the company should be bought out by a private equity firm “we could be revisited by the ghost of Dunkin past.” The law wasn’t about companies like Dunkin', but about the “20 percent that are snake oil salesman.”

Shanahan was referencing the earlier testimony of Eric Stites, CEO of Franchise Business Review, who opposed the bill, citing his publication’s survey of some 97 New Hampshire franchisees that indicated that 80 percent of franchisees trusted their corporate office.

That indicated, Shanahan said, that a fifth didn’t have such trust.

Nevertheless, most agreed with Stites.

“The false premise behind this bill is that there is a problem in business format franchises,” said Richard Moore, chief administrative officer of Planet Fitness, based in Dover.

The bill, he said, would prevent a corporate office from enforcing standards that increase the value of the franchise for everybody else. By doing so, “it would inhibit growth, and it wouldn’t build trust.”


 

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