[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5600 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 5600

   To amend the Small Business Act to establish rules for franchisee 
   eligibility for financial assistance under certain small business 
                               programs.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 18, 2014

    Mr. Graves of Missouri introduced the following bill; which was 
              referred to the Committee on Small Business

_______________________________________________________________________

                                 A BILL


 
   To amend the Small Business Act to establish rules for franchisee 
   eligibility for financial assistance under certain small business 
                               programs.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Franchise Financing Improvement Act 
of 2014''.

SEC. 2. ELIGIBILITY FOR FINANCIAL ASSISTANCE.

    Section 2 of the Small Business Act (15 U.S.C. 631) is amended by 
adding at the end the following new subsection:
    ``(k) The Administrator shall make financial assistance available 
to franchisees under this Act or titles III and V of the Small Business 
Investment Act of 1958 if the franchisee is not affiliated with the 
franchisor pursuant to section 3 of this Act.''.

SEC. 3. AFFILIATION RULES FOR FRANCHISEES.

    Section 3(a)(5) of the Small Business Act (15 U.S.C. 632(a)(5)) is 
amended by adding at the end the following new subparagraphs:
                    ``(C) Eligibility of franchisees.--For purposes of 
                determining eligibility of franchisees for financial 
                assistance under this Act or titles III and V of the 
                Small Business Act, a franchisee shall not be 
                considered affiliated with the franchisor if--
                            ``(i) the franchisor has filed a disclosure 
                        document pursuant to--
                                    ``(I) part 436 of title 16, Code of 
                                Federal Regulations (or any successor 
                                regulation); or
                                    ``(II) any law or regulation of a 
                                State or territory that mandates 
                                disclosure of information to a 
                                franchisee; and
                            ``(ii) the franchisee, upon default on a 
                        loan (whether guaranteed by the Administrator 
                        or not) has no ability to obtain financial 
                        assistance from the franchisor to repay such 
                        loan. For purposes of this clause, a 
                        franchisor's authority to repurchase the 
                        franchise for failure to comply with the terms 
                        and conditions of the franchise agreement or 
                        have the right of first refusal to purchase the 
                        franchise from the franchisee shall not be 
                        considered financial assistance to repay loans 
                        issued to the franchisee.
                    ``(D) Definitions.--For the purposes of 
                subparagraph (C), the terms `franchisor' and 
                `franchisee' have the meaning given those terms in 
                section 436.1 of title 16, Code of Federal Regulations 
                as of January 1, 2014, or any successor regulation.''.

SEC. 4. ISSUANCE OF REGULATIONS.

    (a) The Administrator, after the opportunity for notice and 
comment, shall issue regulations to implement this Act within 120 days 
of enactment.
    (b) If the Administrator fails to promulgate such regulations, the 
Administrator shall, unless there is clear and convincing evidence of 
fraud, honor the terms and conditions of any guarantee issued by the 
Administrator pursuant to the Small Business Act (15 U.S.C. 631 et 
seq.) or titles III and V of the Small Business Investment Act of 1958 
(15 U.S.C. 661 et seq.) without regard to whether the entity complied 
with any Standard Operating Procedure issued by the Administrator until 
such time as the Administrator issues regulations under subsection (a).
    (c) For purposes of subsection (b), the term ``Standard Operating 
Procedure'' shall have the meaning given the term ``SOPs'' in section 
120.10 of title 13, Code of Federal Regulations as in effect on January 
1, 2014, or any successor regulation.
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