I 
115TH CONGRESS 
1ST SESSION 
H. R. 470 
To establish minimum standards of fair conduct in franchise sales and 
franchise business relationships, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 12, 2017 
Mr. ELLISON (for himself, Mr. HUFFMAN, Mr. CONYERS, and Ms. MCCOL-
LUM) introduced the following bill; which was referred to the Committee 
on the Judiciary 
A BILL 
To establish minimum standards of fair conduct in franchise 
sales and franchise business relationships, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Fair Franchise Act of 2017’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is the following: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purpose. 
Sec. 3. Unfair franchise practices. 
Sec. 4. Standards of conduct. 
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Sec. 5. Procedural fairness. 
Sec. 6. Transfer of a franchise. 
Sec. 7. Renewal of the franchise; notice. 
Sec. 8. Termination; good cause; notice; opportunity to cure. 
Sec. 9. Effect of termination. 
Sec. 10. Transfer of franchise by franchisor. 
Sec. 11. Private right of action. 
Sec. 12. Scope and applicability. 
Sec. 13. Definitions. 
Sec. 14. Severability. 
Sec. 15. State attorneys general. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—Congress finds the following: 
(1) Franchise businesses represent a large and 
growing segment of the Nation’s retail and service 
businesses and are rapidly replacing more traditional 
forms of small business ownership in the American 
economy. 
(2) Franchise businesses involve a joint enter-
prise between the franchisor and franchisees in 
which each party has a vested interest in the success 
of the franchised business. 
(3) Most prospective franchisees lack bar-
gaining power and generally invest substantial 
amounts to obtain a franchise business when they 
are unfamiliar with operating a business, with the 
business being franchised, and with industry prac-
tices in franchising. 
(4) Franchisees invest a substantial amount of 
their own money, take loans (often secured by their 
own home and retirement accounts, and the Amer-
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ican taxpayer via loans guaranteed by the Small 
Business Administration), and enter into long-term 
commercial leases and other obligations for the fran-
chise businesses in order to support themselves and 
their families. 
(5) Franchise agreements reflect a profound 
imbalance of contractual power in favor of the 
franchisor, and fail to give due regard to the legiti-
mate business interests of the franchisee, as a result 
of the franchisor reserving one-sided and pervasive 
contractual rights over the franchise relationship. 
(6) Franchisees may suffer substantial financial 
losses when the franchisor does not provide truthful 
or complete information regarding the franchise op-
portunity, or where the franchisor does not act in 
good faith or in a commercially reasonable manner 
in the performance of the franchise agreement. 
(7) Unlike investments in securities, an invest-
ment in a franchise may lead to substantial addi-
tional losses well beyond the initial capital invest-
ment. Unlike employment, due to long-term contrac-
tual and lease obligations, franchisees generally can-
not simply resign and leave the franchised business 
without substantial liabilities. 
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(8) Traditional common law doctrines have not 
evolved sufficiently to protect franchisees adequately 
from fraudulent or unfair practices in the sale and 
operation of franchise businesses, and significant 
contractual and procedural restrictions have denied 
franchisees adequate legal recourse to protect their 
interests in such businesses. 
(9) Contractual obligations of the franchisee to 
the franchisor may create an environment that 
makes it difficult to pay workers significantly above 
minimum wage or provide reasonable benefits to 
workers. 
(10) A franchisee’s freedom to achieve a con-
tract negotiated at arm’s length is greatly limited by 
the disparity of bargaining power, lack of consistent 
legal standards, and other factors described above. 
This Act is necessary to restore true freedom to con-
tract, and to improve the living standards of employ-
ees of franchises. 
(11) The Federal Government has had a signifi-
cant interest in regulating franchising and has regu-
lated franchising for over 40 years through the Fed-
eral Trade Commission and its Franchise Rule. 
(b) PURPOSE.—It is the purpose of this Act to— 
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(1) promote the compelling interest of the pub-
lic in fair business relations between franchisees and 
franchisors; 
(2) protect franchisees against unfair treatment 
by franchisors, who inherently have superior eco-
nomic power and superior bargaining power in the 
negotiation of the terms and conditions of the fran-
chise relationship; 
(3) provide franchisees with rights and remedies 
in addition to those existing by contract or common 
law; 
(4) govern franchise agreements, including any 
renewals or amendments, to the full extent con-
sistent with the Constitution of the United States; 
and 
(5) create an environment that gives franchisees 
opportunity to thrive, therefore having the oppor-
tunity to provide better wages and benefits to their 
employees. 
SEC. 3. UNFAIR FRANCHISE PRACTICES. 
(a) MISREPRESENTATIONS
IN REQUIRED DISCLO-
SURE.—In connection with any disclosure document, no-
tice, or report required by any Federal, State, or local law, 
it shall be unlawful for any franchise seller, either directly 
or indirectly through another person— 
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