Schakowsky, Huffman, Johnson Introduce Legislation to Empower Franchise Owners

Full Text of Bill (PDF) | One-Pager of Bill (PDF)

WASHINGTON – Today, U.S. Representatives Jan Schakowsky (IL-09), Jared Huffman (CA-02), and Hank Johnson (GA-04) introduced legislation to ensure that small business owners who enter into franchise agreements with big corporations will be afforded the opportunity to address claims against the franchisor, putting them on a level playing field. The Franchisee Freedom Act will explicitly give franchise owners private right of action on FTC Franchise Rule violations. 

"Becoming a franchisee can be a lifeline for those looking to create their own American dream. Unfortunately, due to a weak rule and even weaker enforcement of the Federal Trade Commission's Franchise Rule, that dream can turn into a nightmare, one in which they are under the thumb of a predatory corporation,” said Congresswoman Jan Schakowsky. “That is why it is imperative for franchisees that we pass this legislation, which provides small business owners harmed by violations of the Franchise Rule with the means to recover from the harm done."

“Entering franchise agreements is a great way for small business owners to gain the assurance and financial support of a larger corporation, but current law enables franchisers to unfairly take advantage of these negotiations,” said Congressman Jared Huffman. “Our bill would help prevent franchisees from falling victim to predatory practices and put them on a level playing field with their franchisers. This legislation is a necessary step toward ensuring fairness in franchising and accommodating for the current gaps in Federal Trade Commission regulations.”

“The vast majority of franchisees are small businesses with less than 20 employees,” said Congressman Hank Johnson. “I’m proud to co-lead this bill with Congresswoman Schakowsky and Congressman Huffman to give franchisees access to the courts so that they can address claims against the franchisor, putting them on a level playing field when enforcing their rights.”

Currently there is no private right of action allowed on FTC Franchise Rule violations. Courts have ruled, and it has been footnoted in the FTC Act, that since Congress has not given a private right of action, none can be implied. 

The bill has been endorsed by over 45 organizations. Find a full list of endorsements here.

"I appreciate Reps. Schakowsky, Huffman, and Johnson for reintroducing the Franchisee Freedom Act. Giving franchisees access to the courts to mitigate claims of improper disclosure seems like a fundamental right. This year she has added the franchisees' right to association without interference or retaliation. It actually blows me away that we even have to fight for what most would consider basic American protections", said Keith Miller, Principal, Franchisee Advocacy Consulting.

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