Iowa law repeal try fails

After the Franchise Act was passed, affording Iowa franchisees guarantees against encroachment and arbitrary contract cancellations, major franchise organizations threatened to bring all new-business development in the state to a halt. “Franchisors have tried to hack away at this statute each year since it was passed”…

Franchise Times
June 1, 1997

Iowa law repeal try fails
H. Lee Murphy

The Iowa Franchise Investment Act, one of the nation’s most pro-franchisee statutes, once again has survived intact after frenzied efforts at repeal by a coalition of large franchisors.

The Iowa Legislature adjourned in May; stuck in the Senate commerce committee was a House-passed franchisor-endorsed bill that would have gutted the original 1992 legislation.

The bill is officially alive, possibly to be taken up again in January when the Legislature reconvenes.

“We’re not sure what kind of support we have for the bill in the Senate,” says Jennifer Tyler, executive director of the Des Moines-based Iowa Coalition for Responsible Franchising, which has pushed for the bill, sponsored by big chains such as McDonald’s, Pizza Hut and Subway. “But we’ll continue to push for passage next year.”

After the Franchise Act was passed, affording Iowa franchisees guarantees against encroachment and arbitrary contract cancellations, major franchise organizations threatened to bring all new-business development in the state to a halt. Most weren’t mollified by a 1995 revision that softened the original anti-encroachment provisions.

Coalition critics estimate that franchisors spent close to $275,000 last year on statewide elections. Both Statehouse chambers, controlled by Democrats in 1992, are today Republican.

“Franchisors have tried to hack away at this statute each year since it was passed, “ observes Brent Appel, a Des Moines lawyer who represents franchisees.

“I fully expect that they will be back in force next year,” he adds.

Franchisors could well succeed next time; even Democrats have wavered in their support.

Says Sen. Patrick Deluhery, a Democrat and ranking minority member on the commerce committee: “I’m not persuaded that it’s the approach we ought to take. But I’m open to looking at this issue.

“It may be that the statute has some problems that can still be corrected.


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Risks: Investments in franchising will stop & be lost if law passed, Encroachment (too many outlets in area), Frenzied lobbying, Threats toward politicians by franchisors, Political contributions by franchisors (v. franchisees), Franchisors want the minimum regulation they can get away with, United States, 19970601 Iowa law

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