Joel Libava
Small business owners who enter into franchise agreements with large corporations may soon have more protection. How?
Because of the reintroduction of the Franchisee Freedom Act by Congresswoman Jan Schakowsky (IL-09).
As the Ranking Member of the Innovation, Data, and Commerce Subcommittee of the House Energy and Commerce Committee, Schakowsky is leading the charge to level the playing field for franchisees.
Franchisee Freedom Act Details
In a nutshell, the Franchisee Freedom Act aims to address a critical gap in the current system—ensuring franchisees have a clear pathway to address claims against franchisors who violate the Federal Trade Commission’s (FTC) Franchise Rule. This rule was designed to provide transparency by requiring franchisors to disclose key information about the risks and benefits of purchasing a franchise.
However, weak enforcement has left many franchisees vulnerable to unscrupulous corporate practices.
Schakowsky highlighted the stakes in a recent statement:
“Franchisors can be a lifeline for those looking to create their own American dream. Unfortunately, due to a weak rule and even weaker enforcement of the FTC’s Franchise Rule, that dream can turn into a nightmare, one in which they are under the thumb of a predatory corporation. That is why it is imperative for franchisees that we pass this legislation, which provides small business owners harmed by violations of the Franchise Rule with the means to recover from the harm done.”
The legislation has already gained support from key advocates, including Keith R. Miller, Principal of Franchisee Advocacy Consulting. Miller (one of the good guys in franchising), emphasized the importance of accountability in the franchising world:
“Full and proper disclosure is foundational to the success of franchising. This legislation would hold franchisors responsible for violations of the FTC Franchise Rule by allowing harmed franchisees their fundamental right to court access to mitigate their claims.”
The Franchisee Freedom Act is cosponsored by Representatives Jared Huffman (CA-02) and Hank Johnson (GA-04).
If the bill passes, it may provide franchisees with vital legal avenues to protect their investments and ensure fair treatment in their partnerships with franchisors.
Finally, for current and aspiring franchisees, this legislation represents a significant step toward maintaining the integrity of the franchising system and empowering franchise business owners across the country.
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