Bay State’s Busy 2013 Legislative Year Continues Into 2014
Throughout 2013, Massachusetts saw a great deal of legislative activity affecting the franchise industry, a trend that is likely to continue this year.
Franchisor Sales Reporting
In addition to promoting legislation that would clarify the independent contractor status of franchisees and fighting against a harmful franchise relationship bill, the International Franchise Association successfully stopped a budget proposal to require franchisors to collect and report their Massachusetts franchisees’ sales. Although New York passed a similar law a few years ago, it remains the only state to have done so. Departments of revenue in other states that have considered franchisor sales reporting have realized that it yields little if any “budget dust.”
Independent Contractor Legislation
The Commonwealth considered more than a half-dozen pieces of legislation to clarify the current “ABC” system used to determine whether an individual is an employee or an independent contractor. In July, IFA staff spoke in Lexington before the Joint Labor and Workforce Development Committee and urged it to clarify franchisees’ independent contractor status. In November, CFWshops Chief Concept Officer and IFA board member Michael Seid, CFE, along with members of the IFA staff, testified before the Joint Committee on Consumer Protection and Professional Licensure in favor of Senate Bill 150, “An Act Recognizing the Independence of Franchise Operators.” The bill was filed by Sen. Bruce Tarr, who is a practicing attorney familiar with worker classification issues. IFA will continue to promote this bill, as well as similar legislation.
Detrimental Franchise Relationship Legislation
Like a villain in a B-rated horror movie that refuses to die, Senate Bill 73, a very damaging franchise relationship bill, was reintroduced in Massachusetts. The legislation contains strict new regulations on franchise contracts and introduces vague new language that would burden the courts with frivolous litigation. In December, an IFA delegation met with legislators and staff, as well as other key stakeholders to oppose the bill. Later, on Dec. 12, a panel organized by IFA testified against the bill before the Joint Committee on Community Development and Small Businesses. The panel included Dessange International Inc. Gen. Counsel, Sec. and Dir. Ken Kaplan; Mr. Rooter franchisee David Tourville; and Nixon Peabody Partner Gregg Rubenstein. Additionally, CFWshops CCO Michael Seid submitted a detailed letter to the committee opposing the bill. The committee took no action on the bill.
No matter what legislative challenges and opportunities 2014 holds, rest assured IFA will be prepared to meet them. The successes we had in Massachusetts and elsewhere in 2013 would not have been possible without the participation of individuals like those named above.
Dean A. Heyl is senior director of government relations, public policy & tax counsel for the International Franchise Association. Find him at fransocial.franchise.org.