An Act To Enact the Maine Small Business Investment Protection Act
Maine Legislature, Session 126, LD 1458
Committee Amendment CA_B_H670 (House)

COMMITTEE AMENDMENT .:]3" to H.P. 1043, L.D. 1458, Bill, "An Act To 
Enact the Maine Small Business Investment Protection Act" 
Amend the bill by striking out everything after the enacting clause and before the 
summary and inserting the following: 
'Sec. 1. 10 MRSA c. 208-C is enacted to read: 
CHAPTER 208-C 
MAINE SMALL BUSINESS INVESTMENT PROTECTION ACT 
§1299. Short title 
This chapter may be mown and cited as "the Maine Small Business Investment 
Protection Act." 
§1299-A. Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1. Designated family member. "Designated family member" means the spouse, 
child, grandchild, parent, brother or sister of the owner of a franchisee who, in the case of 
the owner's death, is entitled to inherit the ownership interest in the franchise under the 
terms of the franchisee's will, or who, in the case of an incapacitated owner of a franchise, 
has been appointed by a court as the legal representative of the franchisee's property. 
2. 
Franchise. 
"Franchise" means any continuing commercial relationship or 
arrangement in which the terms of the offer or contract specify, or the franchise seller 
promises or represents, orally or in writing, that: 
A. 
The franchisee obtains the right to operate a business that is identified or 
associated with the franchisor's trademark or to offer, sell or distribute goods, 
services or commodities that are identified or associated with the franchisor's 
trademark; 
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B. The franchisor e~erts or has the authority to exert a significant degree of control 
over the franchisee's method of operation or provide significant assistance in the 
franchisee's method of operation; and 
C. 
As a condition of obtaining or commencing operation of the franchise, the 
franchisee makes a required payment or commits to make a required payment to the 
franchisor or its affiliate. 
3. Franchise agreement. "Franchise agreement" means a contract that governs the 
rights and obligations of a franchisor and franchisee. 
4. Franchisee. "Franchisee" means a person to whom a franchise is granted. 
5. Franchisor. "Franchisor" means a person that grants a franchise. 
6. Good cause. "Good cause" means a franchisee's refusal or failure to comply 
substantially with any material, reasonable and reasonably necessary express obligation 
of the franchise agreement, includhlg repeated and intentional nonpayment of royalties or 
other payments clearly required by the franchise agreement. 
7. Good faith. "Good faith" means honesty in fact and the observance of reasonable 
commercial standards of fair dealing in the trade. 
8. Person. "Person" means a natural person, corporation, partnership, trust or other 
entity, and, in the case of an entity, "person" includes any other entity in which the person 
has a majority interest or effectively controls as well as the individual officers, directors 
and other persons in active control ofthe activities of each such entity. 
§1299-B. Jurisdiction 
A person who violates any provision of this chapter is subject to the jurisdiction of 
the courts of this State, upon service of process in accordance with Title 14, chapter 203 
and consistent with the maximum limits of due process as decided by the United States 
Supreme Court. 
§1299-C. Applicability of chapter 
This chapter does not apply to a franchisor or franchisee who is subject to chapter 
204, 204-B, 206-B, 208-B, 211-A or 214-A. 
§1299-D. Reasonableness and good faith 
1. Good faith. A franchise agreement entered into under this chapter imposes on the 
parties the obligation to act in good faith. 
2. Reasonableness. This chapter imposes on every term and provision of a franchise 
agreement a requirement of reasonableness. 
Every term or provision of a franchise 
,agreement must be interpreted so that the requirements or obligations imposed are 
reasonable. 
§1299-E. Cancellation, termination and nonrenewal 
1. Prohibitions on cancellation, termination and nonrenewal. A franchisor may 
not terminate, cancel or fail to renew a franchise for the failure or refusal of the 
franchisee to: 
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COMMITTEE AMENDMENT ·B" to H.P. 1043, L.D. 1458 
A. Take part in promotional campaigns for the products or services of the franchise 
that are not reasonable and that are not in good faith expected to promote the 
profitability of the franchisee's business; 
B. Meet sales quotas suggested or required by the franchisor that are not expressly 
set forth in the franchise agreement; 
C. Sell any products or services at a price suggested or required by the franchisor, an 
affiliate ofthe franchisor or any supplier approved by the franchisor; 
D. 
Keep the franchised premises open and operating during hours that are 
unprofitable to the franchisee, or preclude the franchisee from establishing its own 
hours of operation or nonoperation between the hours of 10 p.m. and 6 a.m.; or 
E. Give the franchisor, or any supplier, financial records of the operation of the 
franchisee that are not related to or are unnecessary to the performance of the 
franchisee's express obligations under the franchise agreement. 
2. 
Notice of nonrenewal and opportunity to cure. 
Before nonrenewal of a 
franchise, a franchisor shall give a franchisee written notice of not less than 90 days prior 
to the effective date of the nonrenewal. The notice must state the reasons that constitute 
good cause for the nonrenewal and must provide the franchisee with not less than 60 days 
to cure any claimed discrepancy and reinstate its right to renew the franchise. 
3. Notice of termination or cancellation and opportunity to cure. A franchisor 
may not terminate or cancel a franchise agreement, except for good cause. A franchisor 
shall give a franchisee written notice at least 90 days prior to the effective date of the 
tennination or cancellation. The notice must state all of the reasons constituting good 
cause for termination or cancellation and must provide the franchisee with not less than 
days to cure any claimed cause for the tennination or cancellation. 
§1299-F. Transfer of business 
1. Transfer. A franchisor may not unreasonably withhold or delay consent to any 
transfer of the franchisee's business or transfer of the stock or other interest in the 
franchise to the franchisee's spouse, son or daughter or other transferee when the 
transferee meets the material and reasonable qualifications and standards required of the 
franchisor's' franchisees. If a franchisor detennines that a transferee does not meet the 
franchisor's qualifications and standards, the franchisor shall give the franchisee written 
notice of that determination, stating the specific reasons for withholding consent. A 
franchisor has 90 days from the date notice is served by the franchisee to consider a 
franchisee's request to make a transfer under this subsection. 
2. 
Assume obligations. When a transfer of a franchisee's business occurs,. the 
transferee assumes all the obligations imposed on and succeeds to all the rights held by 
the selling franchisee by virtue of any agreement, consistent with this chapter, entered 
into prior to the transfer between the selling franchisee and the franchisor. 
§1299-G. Survivorship 
1. Right of designated family member. The right of a designated family member 
to succeed in ownership or management of a franchise is governed by the following 
proVISIOns. 
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COMMITTEE AMENDMENT;£3" to H.P. 1043, L.D. 1458 
A. Any designated family member of a deceased or incapacitated franchisee who has 
been designated as successor to that franchisee in writing to the franchisor may 
succeed the franchisee in the ownership or operation of the franchise under the 
existing franchise agreement if the designated family member gives the franchisor 
written notice of the intention to succeed to the franchise within 120 days of the 
franchisee's death or incapacity. The designated' family member may not succeed the 
franchisee if there exists good cause for refusal to honor the succession on the part of 
the franchisor. 
B. The franchisor may request and the designated family member shall provide, upon 
the request, on forms provided for that purpose, personal and financial data that is 
reasonably necessalY to detennine whether the succession may be honored. 
§1299-H. Public policy 
A contract or part of a contract or activity undertaken pursuant to a contract in 
violation ofthis chapter is against public policy and is void and unenforceable, including 
a contract or agreement purporting to vary, waive or disclaim the effects of this chapter 
on any franchise agreement. 
Sec. 2. Application. This Act applies to all contracts and agreements in effect on 
the effective date of this Act that have no expiration and are continuing contracts and all 
other contracts and agreements entered into, amended, renewed or extended after the 
effective date of this Act.' 
SUMMARY 
This amendment is the minority report of the committee and it replaces the bill. It 
does the following. 
1. It enacts the Maine Small Business Investment Protection Acts, establishes that 
- violations of the Act are subject to the jurisdiction of the courts of this State and exempts 
from the provisions of the Act franchisors and franchisees that are subject to other 
statutory franchise relationship laws in the Maine Revised Statutes, Title 10, chapter 204, 
204-B, 206-B, 208-B, 2-11-A or 214-A. 
2. It establishes a standard of reasonableness and good faith for all agreements 
entered into under the Maine Small Business Investment Protection Act. 
3. It provides standards regarding cancellation, tennination and nonrenewal of a 
franchise to require good cause, prior notice and the opportunity to cure. 
4. It includes protections for a franchisee's right to transfer or assign an interest in a 
franchise. 
5. It provides for survivorship rights for a designated family member of a deceased 
or incapacitated franchisee. 
6. It contains a public policy section that states that a contract or part of a contract or 
activity undertaken pursuant to a contract in violation of the Maine Small Business 
Investment Protection Act is against public policy and is void and unenforceable. 
7. It adds an application section. 
FTSCAL :'\on: REQURED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 03/06/14 wac 
LD 1458 
LR 1591(03) 
An Act To Enact the Maine Small Business Investment Protection Act 
Fiscal Note for Bill as Amended by Committee Amendment i3'LH--l.o 10 ) 
Committee: Labor, Commerce, Research and Economic Development 
Fiscal Note Required: Yes 
Fiscal Note 
Minor cost increase - General Fund 
Minor revenue increase - General Fund 
Correctional and Judicial Impact Statements 
Increases the number of civil cases. 
The collection of additional filing fees may also increase General Fund revenue by minor amounts.