By Matt Haller, IFA
Since its inception last year, LD 1458, the inaptly named “Maine Small Business Investment Protection Act,” and its proponents have unfortunately misled both the public and legislators.
Here’s what the bill would really do if passed:
Change The Rules In The Middle of the Game
LD 1458 throws existing contracts into question, threatens future development and could potentially bring franchise development to a near-halt in Maine. When a less egregious franchise relationship bill passed in Iowa in 1992, Iowa had significantly less growth compared to the national average, and saw slower growth compared to neighboring states – a staggering 42% differential in franchise unit growth compared to adjacent states.
Damage The Consumer Experience And The Overall Brand Value
By changing existing business contracts midstream, LD 1458 would dilute Maine’s consumer experience through drastic storefront-to-storefront inconsistencies. LD 1458 would seriously undermine franchise contracts and supersede the protection for franchisees who rely on their franchisor to protect the brand.
Shrink Franchise Investment In Maine
LD 1458 is a deterrent to franchisors considering investment in Maine. Many franchisors have definitively said they will simply pursue investment in other states that have a more business-friendly environment if brand integrity cannot be maintained in Maine.
Furthermore, the proponents of this bill in recent weeks have also made increasingly outrageous claims about both the franchising industry as a whole and the IFA. While we are not going to address each of them, here is a selection of the most egregious:
MYTH: The IFA has refused to speak with LD 1458’s proponents to discuss the effects of this legislation
FACT: The IFA has always welcomed discussion of LD 1458 with the Maine Franchise Owners Association.
MYTH: LD 1458 will have no effect on existing franchise contracts.
FACT: The bill creates inconsistencies under franchise contracts, eroding many of the fundamental tenets that define the franchising model.
MYTH: LD 1458 will have a positive economic impact on franchise development. Other states with franchise relationship laws have outpaced franchise growth rates nationwide.
FACT: LD 1458 deters franchisors from investing in Maine’s small business owners by creating uncertainty in the Maine market. Rather than expand in Maine, where brand consistency would no longer be ensured, businesses will look to invest elsewhere should LD 1458 be enacted
Legislation like LD 1458 only works as a disservice to efforts across Maine to explore new ways to innovate and grow local economies. Those hurt most from this bill will be Maine’s small business owners, despite what LD 1458’s title suggests.