MYTH:

H.B. 352 & S.B. 129 Protect Alabama Franchise Owners

FACT: H.B. 352 & S.B. 129 only protect underperforming franchise owners in the state of Alabama. Both bills represent an attempt to fit the square peg of government overreach into the round hole of thousands of franchise agreements.

Franchising is a unique business model reliant upon brand standards: it's what ensures consumers can walk into a McDonald's in Tuscaloosa or Tokyo and eat comfortably knowing their food is safe and their customer experiences matter to the local franchise small business owner. For these local owners, brand reputation is everything.

H.B. 352’s & S.B. 129’s one-size-fits-all regulation damages this reputation by allowing underperforming and bad operators to remain in business longer - fully protected thanks to the Alabama Legislature. This means the hard-earned trust and customer satisfaction a franchise owner has worked years to cultivate can quickly evaporate, as subpar and unsatisfactory locations keep their lights on longer. This raises the risk of more small businesses shutting their doors.


MYTH:

H.B. 352 & S.B. 129 protect a franchisee’s rights to pursue legal action against their brand company

Proponents of these bills argue their measures are David’s slingshot against Goliath; small franchise owners need protection against greedy and powerful franchise companies. That’s a myth.

FACT: Franchisees and franchisors are already considered equal parties entering into contract under U.S. and Alabama law. Franchisors are legally required to provide extensive disclosure documents to franchisees before entering into a franchise agreement to help ensure that both parties understand each other’s expectations and obligations. Franchise agreements, like any other contractual agreement, set forth guidelines and expectations that each party reviews, understands and agrees to (or negotiates upon) before mutually signing. These agreements and the standards under which franchise businesses operate are designed to help ensure a uniform and quality experience for customers.

H.B. 352 & S.B. 129 were drafted by plaintiff attorneys and will create more costly litigation in Alabama. The dramatic changes of these bills will open thousands of contracts already signed to potential litigation.  Additionally, the bills will reduce the future investment and growth opportunities for franchise owners in the state and could discourage development from franchise brands looking to expand into Alabama. The only real winners are plaintiff’s lawyers.


MYTH:

These bills are needed right now to correct an unfair system.

FACT: Alabama has never considered such sweeping regulations to franchising before. The Act’s language refers to protecting franchisees against “unfair treatment by franchisors,” but no such extensive problems have been documented before. So why now?

In reality, franchise companies operating in Alabama can only be successful IF THEIR FRANCHISEES ARE SUCCESSFUL! And the data shows that, rather than an error-prone, rigged, and damaging system which hurts local business owners who’ve invested their life savings, franchising is an engine of economic growth and opportunity in Alabama based on this mutually beneficial relationship. In fact, between 2017-2018, the number of franchised businesses in Alabama increased by 1.6%, and the number of jobs supported by franchising grew by 3.4%. There’s no need for this legislation!