HB1772 Creates the small business franchise act.
Sponsor: Reynolds, David L. (77) Effective Date:00/00/0000
CoSponsor: LR Number: 2882L.01I
Last Action: 02/03/2000 - Referred: Commerce (H)
Next Hearing:Hearing not scheduled
Calendar:Bill currently not on calendar

Available Bill Summaries for HB1772 Copyright(c)
* Introduced

Available Bill Text for HB1772
* Introduced *



HB 1772 -- Small Business Franchise Act

Sponsor:  Reynolds

This bill regulates various franchise transactions.  In its main
provisions, the bill:

(1)  Outlines illegal practices in connection with the
advertising, offering, sale, or promotion of any franchise;

(2)  Outlines unlawful behaviors in connection with disclosure
documents, notices, or reports, with these provisions effective
90 days after the effective date of the bill;

(3)  Prohibits certain actions in connection with the
performance, enforcement, renewal, or termination of any
franchise agreement, including fraud and discrimination;

(4)  Prohibits a franchisor from terminating a franchise
agreement prior to its expiration without good cause;

(5)  Specifies that a franchisor may not prohibit a franchisee
from engaging in any business at any location after the
franchise agreement has expired;

(6)  Stipulates that a duty to act in good faith is imposed on
each party to a franchise contract;

(7)  Stipulates that duty of due care is imposed on the
franchisor by a franchise agreement;

(8)  States that the franchisor owes a fiduciary duty to its
franchisees and is required to exercise the highest standard of
care for franchisee interests under certain conditions;

(9)  Requires franchisors who administer or supervise the funds
or accounting functions for franchisees to keep all related
moneys in a separate account and to provide an independent audit
of the account;

(10)  Allows a franchisee to assign an interest in a franchised
business to certain transferees, with a minimum 30-days written
notice to the franchisor;

(11)  Outlines the conditions the franchisor may require for
approved transfers and specifies those occurrences which do not
constitute transfers requiring the consent of the franchisor;

(12)  Allows a franchisee to assign his or her interest in the
franchise for the unexpired term of the franchise agreement;

(13)  Outlines the conditions under which a franchisor is
allowed to sell or transfer interest in a franchise;

(14)  Prohibits a franchisor from restricting a franchisee from
obtaining equipment, supplies, or services used in the operation
of the franchise from a source of the franchisee's choosing,
within certain broad limits;

(15)  Requires franchisors to report at least once a year the
amount of revenue and profit earned from the sale of equipment,
fixtures, supplies, or services to their franchisees;

(16)  Restricts a franchisor from placing new outlets for a
franchised business in unreasonable proximity to an established
outlet of a similar kind of franchised business;

(17)  Authorizes the state to bring a civil action when the
Attorney General has reason to believe that the interests of
Missouri residents are adversely affected due to a violation of
the provisions of the bill; and

(18)  Authorizes any party to a franchise who is injured by a
violation of the provisions of the bill to a right of action for
recission and restitution, and for all damages and injunctive

The provisions of the bill apply to franchise transactions
occurring after the effective date of the bill.


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Last Updated October 5, 2000 at 11:34 am