Fair Franchise Practices Bill: Sourcing of Goods and Services

(UnhappyFranchisee.Com) Proposed PA House Bill 1620 (Fair Franchise Practices Bill) states that “a franchisor may not prohibit or restrict a franchisee from obtaining equipment, supplies, goods or services used in the establishment or operation of the franchised business from sources of the franchisee’s choosing.”

It states:

§ 908. Sourcing of goods and services.

(a) Scope of section.–This section shall apply to all goods and services which the franchisee is required to obtain, whether or not they are related to a trademark, trade name, trade secret, or patent owned, used or controlled by or licensed to the franchisor or its affiliate.

(b) Franchisee’s choice.–

(1) Except as set forth in paragraph (2), a franchisor may not prohibit or restrict a franchisee from obtaining equipment, supplies, goods or services used in the establishment or operation of the franchised business from sources of the franchisee’s choosing.

(2) Goods and services may be required to meet established uniform systemwide quality standards which are not arbitrarily promulgated or enforced by the franchisor.

(c) Lists.–Without limiting the rights of the franchisee under subsection (b), a franchisor shall provide and continuously update an inclusive list of suggested vendors for all goods and services related to the business.

(d) Benefits of purchasing.–

(1) A franchisor shall fully disclose whether or not it receives any rebate, commission or other benefit as a result of the purchase of goods or services by a franchisee.

(2) A rebate, commission or benefit under paragraph (1) shall be remitted to the franchisee that made the purchase.

(e) Reports.–The franchisor shall at least annually, using generally accepted accounting principles, report the amount of revenue and profit it earns from the sale of goods and services to the franchisee and to subfranchisees.

What do you think of the Sourcing of Goods and Services provision of the proposed PA House Bill 1620 (Fair Franchise Practices Bill)?

Do you believe that making this provision law will be good for franchising?

Why or why not?  Please share a comment below.

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TAGS: Sourcing of Goods and Services, franchise legislation, PA House Bill 1620, PA Responsible Franchise Practices Bill, Fair Franchising Legislation, Franchise laws, Pennsylvania State Rep. Peter Daley

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