(1) to— 
(A) make an untrue statement of material 
fact; 
(B) fail to state a material fact; or 
(C) fail to state any fact which would 
render any required statement or disclosure ei-
ther untrue or misleading; and 
(2) fail to furnish any prospective franchisee 
with— 
(A) all information required to be disclosed 
by law and at the time and in the manner re-
quired; 
(B) a written statement specifying, promi-
nently and in not less than 14-point type, 
whether the franchise agreement involved con-
tains a right to renew such agreement; and 
(C) historical financial performance data 
including sales, expenses, and profitability data, 
in the disclosure document or to make any 
claim or representation to a prospective 
franchisee whether orally or in writing, which is 
inconsistent with, or which contradicts, the 
franchisor’s disclosure document. 
(b) DECEPTIVE AND DISCRIMINATORY PRACTICES.— 
In connection with the performance, enforcement, renewal, 
VerDate Sep 11 2014 
21:45 Jan 25, 2017
Jkt 069200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H470.IH
H470
sradovich on DSK3GMQ082PROD with BILLS
or termination of any franchise agreement, it shall be un-
lawful for a franchisor or subfranchisor, either directly or 
indirectly through another person, to do any of the fol-
lowing: 
(1) To engage in an act, practice, course of 
business, or pattern of conduct which operates as a 
fraud upon any person. 
(2) To hinder, prohibit, or penalize (or threaten 
to hinder, prohibit, or penalize), directly or indi-
rectly, the free association of franchisees for any 
lawful purpose, including the formation of or partici-
pation in any trade association made up of 
franchisees or of associations of franchisees. 
(3) To discriminate against a franchisee by im-
posing requirements not imposed on other similarly 
situated franchisees. 
(4) To otherwise retaliate, directly or indirectly, 
against any franchisee for membership or participa-
tion in a franchisee association. 
(5) To charge excessive and unreasonable re-
newal fees. Fees shall not be deemed excessive and 
unreasonable if they do not exceed 50 percent of the 
amount of the average initial franchise fee or other 
required payments then being charged to all 
franchisees in the market. 
VerDate Sep 11 2014 
21:45 Jan 25, 2017
Jkt 069200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H470.IH
H470
sradovich on DSK3GMQ082PROD with BILLS
(6) To enforce a clause or provision in a fran-
chise agreement requiring the parties to submit to 
arbitration unless the parties, each being rep-
resented by counsel, have voluntarily entered into an 
agreement after the dispute arises to submit the dis-
pute to arbitration, and then only if the arbitration 
is conducted at a location reasonably convenient to 
the franchisee; provided, however, that the provisions 
of this subsection shall not prohibit the enforce-
ability of a clause or provision in a franchise agree-
ment which requires the parties to submit to non-
binding mediation conducted at a location reasonably 
convenient to the franchisee. 
(7) To terminate, cancel, or fail to renew a 
franchise for the failure or refusal of the franchisee 
to do any of the following: 
(A) Refusal to take part in any pro-
motional campaign which is not reasonable, im-
plemented in good faith, and expected to pro-
mote the profitability of the franchisee’s busi-
ness. 
(B) Failure to meet sales quotas suggested 
or required by the franchisor not expressly set 
forth in the franchise agreement. 
VerDate Sep 11 2014 
21:45 Jan 25, 2017
Jkt 069200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H470.IH
H470
sradovich on DSK3GMQ082PROD with BILLS
(C) Failure or refusal to sell any products 
or services at a price suggested or required by 
the franchisor, an affiliate of the franchisor, or 
any supplier approved by the franchisor. 
(D) Refusal to keep the franchised prem-
ises open and operating during hours which are 
unprofitable to the franchisee or to preclude the 
franchisee from establishing its own hours of 
operation or nonoperation for the period be-
tween the hours of 10 p.m. and 6 a.m., unless 
said business is commonly recognized as an ex-
tended hour business or the initial signed fran-
chise agreement required operating during these 
hours. 
(E) Refusal to give the franchisor or any 
supplier financial records of the operation of 
the franchise which are not related or unneces-
sary to the performance of franchisee’s express 
obligations under the franchise agreement or 
records unrelated to the franchise business. 
(8) To restrict a franchisee from associating 
with other franchisees or from joining, leading, or 
otherwise participating in a trade or other associa-
tion, or retaliate against a franchisee for engaging in 
these activities. 
VerDate Sep 11 2014 
21:45 Jan 25, 2017
Jkt 069200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H470.IH
H470
sradovich on DSK3GMQ082PROD with BILLS
(9) To require or prohibit any change in man-
agement of any franchise unless the requirement or 
prohibition of the change shall be for good cause, 
which cause shall be stated in writing by the 
franchisor and be based on violations of material, 
reasonable and reasonably required express provi-
sions of the franchise agreement. Good cause shall 
include requiring that management of the franchise 
be conducted by— 
(A) personnel who have been trained in the 
manner required of all franchise managers in 
the system; and 
(B) personnel who are legally eligible for 
employment in the United States of America. 
(10) To impose on a franchisee by contract, 
rule, or regulation, whether written or oral, a stand-
ard of conduct or performance unless the franchisor, 
its agents or representatives, sustain the burden of 
proving the standard to be reasonable, necessary, 
and uniformly enforced and applied throughout its 
system of franchisees, franchisor-owned units and li-
censees. The following are examples of unreasonable 
conduct: 
(A) To fail to deal fairly and in good faith 
or fail to exercise due care with a franchisee or 
VerDate Sep 11 2014 
21:45 Jan 25, 2017
Jkt 069200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H470.IH
H470
sradovich on DSK3GMQ082PROD with BILLS
any association or other aggregation or incorpo-
ration of franchisees in all business matters, in-
cluding— 
(i) proposed and actual transfer of the 
franchise; 
(ii) 
administration 
of 
advertising 
funds, rewards programs, and marketing 
funds; and 
(iii) the interpretation, administration, 
and performance of franchise agreements 
and area development or territory agree-
ments. 
(B) To sell, rent, or offer to sell to a 
franchisee or require a franchisee to buy any 
product or service for more than a fair and rea-
sonable price or without the reasonable expecta-
tion that the sale or rental transaction itself 
will be profitable for the franchisee’s business. 
(C) To discriminate between franchisees in 
the charges offered or made for royalties, 
goods, services, equipment, rentals, advertising 
services, or in any other business dealing, un-
less that discrimination between franchisees— 
VerDate Sep 11 2014 
21:45 Jan 25, 2017
Jkt 069200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H470.IH
H470
sradovich on DSK3GMQ082PROD with BILLS