(UnhappyFranchisee.Com) Proposed PA House Bill 1620 (Fair Franchise Practices Bill) states that “a franchisor may not enter into a contract to prohibit the franchisee from engaging in business at a location after the franchise expires or is terminated…”
§ 910. Covenants not to compete.
(a) Prohibition.–Except as set forth in this section, a franchisor may not enter into a contract to prohibit the franchisee from engaging in business at a location after the franchise expires or is terminated under section 916 (relating to termination).
(b) Purchase of assets.–
(1) This section shall not apply if the franchisor, at least 30 days before the effective date of expiration or termination under section 916 pursuant to a written offer, purchases the assets of the franchised business for its fair market value as a going concern. The fair market value of the business must be:
(i) ascertained by an impartial appraiser acceptable to both parties; and
(ii) determined as if the business were to be resold or renewed for a period of years equal to the contract term being offered by the franchisor for new or renewed franchisees.
(2) Forgiveness of debt shall not be considered a purchase of assets.
(3) Upon nonrenewal under section 915(b)(2)(iii) (relating to renewal), a covenant under this paragraph shall be void.
(c) Protection of business of franchisor.–This section shall not apply to a franchise contract obligating a franchisee, after expiration, termination or transfer of a franchise, to do any of the following:
(1) Cease using any trademark, trade secret or other intellectual property owned by the franchisor or its affiliate.
(2) Alter the appearance of the premises and the manner of operation of the franchise business to avoid any likelihood of confusion as to the affiliation of the business with its former franchisor.
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TAGS: Covenants Not to Compete, franchise legislation, PA House Bill 1620, PA Responsible Franchise Practices Bill, Fair Franchising Legislation, Franchise laws, Pennsylvania State Rep. Peter Daley