International Franchise Association Statement on Arizona Franchise Relationship Legislation
HB 2404 advanced Assembly Rules Committee today; legislation would be the most far-reaching franchise law of any state, crush local business ownership opportunitie
WASHINGTON – The International Franchise Association (IFA) today released the following statement on Arizona House Bill 2404, anti-franchising legislation that advanced from the Assembly Rules Committee today. The legislation would create one of the most far-reaching, onerous franchise laws in the country by inserting the state government into private franchise contracts, diminishing brand standards, and closing the door to future franchise opportunities in the state.
“This anti-business legislation is copy and pasted from California law – and taken one step further,” said Jeff Hanscom, IFA vice president for state and local government relations. “IFA urges the Assembly to oppose HB 2404 before it damages the state’s 19,000 local franchise business and any future Arizona business owner that is pursing the American Dream through franchising. HB 2404 is the definition of government overreach, and we hope lawmakers will reject this bill before they vote to turn Arizona into California.”
The foundation of this legislation comes from a 2016 California law, which has resulted in a decrease in the number of franchise brands seeking owners in the state. However, HB 2404 exceeds not only California regulation, but also exceeds the Federal Trade Commission’s current regulatory construct for franchising.
Last month, IFA sent a letter to Arizona Speaker of the House Ben Toma and members of the Arizona legislature urging their opposition to HB 2404, highlighting how the bill would:
- Insert the state of Arizona as a third party in private contracts by adding a first of its kind provision that creates a private right of action under the Federal Trade Commission Franchise Rule.
- Undermine current franchise contracts and promote costly litigation between franchisees and franchisors.
- Cause uneven quality and brand standards – the hallmark of franchising – resulting in fewer loyal customers and shrinking opportunities for new business ventures.
- Result in unsafe and products and services for consumers and workers in Arizona.
- Lead to less future development of new franchise locations in Arizona due to the significant risk associated with a regulatory environment.
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Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 790,492 franchise establishments that support nearly 8.4 million direct jobs, $825.4 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.