This article briefly discusses government regulations surrounding the renewal of franchise relationships:
The CFA, C.G.S. §§42-133f-g, relates solely to the termination, cancellation or failure to renew a “franchise” relationship, and requires that such action by the “franchisor” be taken only with good cause, normally upon 60 days’ written notice.
Lesser notice may be provided in certain unusual circumstances. Good cause includes, but is not limited to, “the franchisee’s refusal or failure to comply substantially with any material and reasonable obligation of the franchise agreement. … ” C.G.S. §42-133f(a).
A franchisee which is improperly terminated, cancelled or non-renewed may sue for injunctive relief, damages and attorney fees, C.G.S. §42-133g(a). All franchises entered into or renewed after Oct. 1, 1973 must be for a minimum of three years. The parties cannot contract away rights under the CFA by a choice of law provision. R & B Assoc. of Conn. V. Deltona, Business Franchise Guide (CCH) ¶7,525 (D. Conn. 1980).
Nearly all state franchise laws (whether “registration and disclosure” or “relationship” statutes) provide that a franchise exists when:
(a) a franchisee is granted the right to engage in the business of selling or distributing (sometimes also “offering”) goods or services under a marketing plan or system prescribed in substantial part by a franchisor; (b) the operation of the franchisee’s business pursuant to that plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logo, advertising or other commercial symbol; and (c) the franchisee is required to pay, directly or indirectly, an amount of money to become associated with the franchisor, commonly referred to as a franchise fee.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
Ryan;
I looked at the article; it is quite amazing.
In Conn., individual insurance agents were found to be franchises. The insurance company was the franchisor. No word on a separate regulatory action for UFOC compliance.
Conn.’s franchise act does not require a payment of a separate franchise fee in its definition of franchise.
Very interesting.