"Georgia Restaurant Franchise Relations Act"; enact
The passing of SB376 is expected to significantly impact the operations of franchises across Georgia by altering the legal framework surrounding franchise agreements. The bill prohibits franchise agreements that require higher operational standards for franchisees compared to franchisor-owned outlets, thus promoting fairness in operations. It also mandates that franchisors cannot discriminate against franchises owned by independent operators, which helps level the playing field between franchised and franchisor-owned establishments.
Senate Bill 376, known as the Georgia Restaurant Franchise Relations Act, is designed to govern the relationships between franchisors and franchisees in the state of Georgia. The bill aims to provide protections for franchisees, making it more challenging for franchisors to terminate franchise agreements without just cause. Under the new provisions, a franchisor may only terminate a franchise if certain conditions are met, such as the franchisee's failure to comply with lawful requirements, which must be communicated with a notice period of at least 90 days to allow for correction.
There are notable points of contention surrounding the bill, particularly regarding the balance of power between franchisors and franchisees. Proponents of the bill argue that it is essential for protecting small business owners from the often overpowering influence of large franchisors. Opponents, however, express concerns that the regulations could stifle the flexibility that franchisors require to successfully run their businesses, particularly as markets evolve. The inclusion of provisions that protect the rights of a deceased franchisee’s survivors to continue the franchise operation has also sparked debate about the long-term ownership transition processes in franchise systems.