So, it’s not surprising that this Session, new protections for small-business owners are capturing legislators’ attention.
Tomorrow, the Senate Committee on Regulated Industries will hear SB 750, known as the Protect Florida Small Business Act. This bill, sponsored by powerful appropriations chair Sen. Jack Latvala, outlines several measures directed toward some of the questionable business practices of out-of-state franchisors in their relationships with Florida’s local franchise business owners.
The critical need of this legislation stems from the many stories that have emerged of abuses in the franchisor-franchisee relationship. Under current law, corporations have the power to terminate franchisees without any justification. This leads to incidents like in 2010, when a Vietnam veteran living in Miami invested $500,000 to open a franchise, only to have his store terminated after only six years. He subsequently opened an independent retail business, but the franchisor corporation moved to enforce an onerous noncompetition clause to prevent him from going out on his own.
Further corporate abuses include preventing the transfer of a business, even in the event of an owner’s death, refusing to renew a franchise agreement, and restricting resale with the intention of a return on investment. Examples of these abuses are found throughout the state. A Tampa couple was forced to shut down their after-school tutoring franchise—and lose $75,000—before they could sell their business to a qualified buyer. An Orlando woman recently had her pre-school franchise terminated without cause after reporting being the victim of domestic violence.
The protections proposed by the Protect Florida Small Business Act seek to provide a stable and fair foundation for local franchise owners to conduct business with corporate franchisors. This would give the franchise owners more security and encourage them to continue to invest in the Florida economy. Interestingly enough, these protections are not new to Florida. Several industries in the state, such as agricultural equipment and automobile dealers, are already offered these protections – this bill would simply extend them to the franchise business industry.
The public has spoken – and Floridians are overwhelmingly in support of taking care of these small-business owners who invest in their communities. A recent poll conducted by Mason-Dixon reported that 71 percent of Floridians think that the state should provide protections to franchise owners. This is an impressive statistic, but also easy to believe when you consider the more than 40,000 franchised businesses in Florida that employ over 400,000 Floridians.
This bill is a product of these stories of young upstarts, family business owners, and veterans losing their livelihoods due to the unchecked power of corporations. With the support of the majority of Floridians, Sen. Jack Latvala and Rep. Jason Brodeur, who are sponsors, hope to extend protections to these local franchise owners and promote their continued growth and investment in the state.