Bill Text: MI HB5465 | 2011-2012 | 96th Legislature | Introduced

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Bill Title: Businesses; franchises; contract provision authorizing independent sourcing of certain goods and services; prohibit. Amends sec. 27 of 1974 PA 269 (MCL 445.1527).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2012-03-13 - Printed Bill Filed 03/09/2012 [HB5465 Detail]

Download: Michigan-2011-HB5465-Introduced.html

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HOUSE BILL No. 5465

 

March 8, 2012, Introduced by Rep. MacMaster and referred to the Committee on Regulatory Reform.

 

     A bill to amend 1974 PA 269, entitled

 

"Franchise investment law,"

 

by amending section 27 (MCL 445.1527), as amended by 1984 PA 92.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 27. Each of the following provisions is void and

 

unenforceable if it is contained in any documents document relating

 

to a franchise:

 

     (a) A prohibition on the right of a franchisee to join an

 

association of franchisees.

 

     (b) A requirement that a franchisee assent to a release,

 

assignment, novation, waiver, or estoppel which that deprives a

 

franchisee of rights and protections provided in this act. This

 

shall However, this subdivision does not preclude prevent a

 

franchisee, after entering into a franchise agreement, from

 

settling any and all claims.

 

     (c) A provision that permits a franchisor to terminate a

 

franchise prior to before the expiration of its term except for

 

good cause. Good cause shall include includes the failure of the

 

franchisee to comply with any lawful provision of the franchise

 

agreement and to cure such that failure after being given the

 

franchisee receives written notice thereof of it and is given a

 

reasonable opportunity , which in no event need be more than 30

 

days, to cure such that failure. As used in this subdivision,

 

"reasonable opportunity to cure" does not require a time period of

 

more than 30 days to cure a failure to comply described in this

 

subdivision.

 

     (d) A provision that permits a franchisor to refuse to renew a

 

franchise without fairly compensating the franchisee, by repurchase

 

or other means, for the fair market value at the time of expiration

 

of the franchisee's inventory, supplies, equipment, fixtures, and

 

furnishings, as determined at the time the franchise expires.

 

Personalized However, personalized materials which that have no

 

value to the franchisor and inventory, supplies, equipment,

 

fixtures, and furnishings that are not reasonably required in the

 

conduct of the franchise business are not subject to compensation .

 

This subsection under this subdivision and this subdivision applies

 

only if both of the following are met: (i)

 

     (i) The term of the franchise is less than 5 years. and (ii)

 

the

 

     (ii) The franchisee is prohibited by the franchise or agreement

 

or any other agreement from continuing to conduct substantially the

 

same business under another trademark, service mark, trade name,

 

logotype, advertising, or other commercial symbol in the same area

 

subsequent to after the expiration of the franchise or the

 

franchisee does not receive at least 6 months months'advance notice

 

of the franchisor's intent not to renew the franchise.

 

     (e) A provision that permits the franchisor to refuse to renew

 

a franchise on terms generally available to other franchisees of

 

the same class or type under similar circumstances. This section

 

However, this subdivision does not require a renewal provision in a

 

franchise.

 

     (f) A provision requiring that requires the conduct of

 

arbitration or litigation be conducted occur outside this state.

 

This shall subdivision does not preclude the a franchisee from

 

entering into an agreement, at the time of arbitration, to conduct

 

arbitration at a location outside this state.

 

     (g) A provision which that permits a franchisor to refuse to

 

permit a transfer of ownership of a franchise, except for good

 

cause. This subdivision does not prevent a franchisor from

 

exercising a right of first refusal to purchase the franchise. Good

 

As used in this subdivision, "good cause" shall include, includes,

 

but is not limited to, any of the following:

 

     (i) The failure of the proposed transferee to meet the

 

franchisor's then current reasonable qualifications or standards.

 

     (ii) The fact that That the proposed transferee is a competitor

 

of the franchisor or subfranchisor.

 

     (iii) The unwillingness of the proposed transferee to agree in

 

writing to comply with all of a franchisee's lawful obligations.

 

     (iv) The failure of the franchisee or proposed transferee to

 

pay any sums money owing to the franchisor or to cure any default

 

in the franchise agreement existing that exists at the time of the

 

proposed transfer.

 

     (h) A provision that requires the franchisee to resell to the

 

franchisor items that are not uniquely identified with the

 

franchisor. This subdivision does not prohibit a provision that

 

grants to a franchisor a right of first refusal to purchase the

 

assets of a franchise on the same terms and conditions as a bona

 

fide third party willing and able to purchase those assets, nor

 

does this subdivision prohibit a provision that grants the

 

franchisor the right to acquire the assets of a franchise for the

 

market or appraised value of such those assets if the franchisee

 

has breached the lawful provisions of the franchise agreement and

 

has failed to cure the breach in the manner provided in subdivision

 

(c).

 

     (i) A provision which that permits the franchisor to directly

 

or indirectly convey, assign, or otherwise transfer its obligations

 

to fulfill contractual obligations to the franchisee unless

 

provision has been is made for providing the required contractual

 

services.

 

     (j) A provision that permits a franchisor to refuse to allow a

 

franchisee to obtain equipment, fixtures, supplies, or services

 

used in the establishment and operation of the franchise business

 

from sources of the franchisee's choosing, if that equipment or

 

those fixtures, supplies, or services meet standards concerning the

 

nature and quality of equipment, fixtures, supplies, or services

 

established by the franchisor. This subdivision does not apply to a

 

provision that requires that the franchisee obtain reasonable

 

quantities of inventory goods or services, including display and

 

sample items, from the franchisor or an affiliate of the

 

franchisor, but only if those goods or services are central to the

 

franchise business, and the goods or services are actually

 

manufactured or produced by the franchisor or affiliate or

 

incorporate a trade secret of the franchisor or affiliate.