[Congressional Record Volume 143, Number 38 (Friday, March 21, 1997)]
[Extensions of Remarks]
[Pages E550-E551]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        FRANCHISE BILL OF RIGHTS

                                 ______
                                 

                         HON. GARY L. ACKERMAN

                              of new york

                    in the house of representatives

                        Thursday, March 20, 1997

  Mr. ACKERMAN. Mr. Speaker, I am calling to the attention of the 
Congress today legislation that I have introduced which would ensure 
that franchisees be guaranteed their fair and equitable rights for the 
franchises that they have developed through extraordinary work and 
sacrifice. Our main streets through out America are populated by a wide 
variety of franchises today. They are a significant component of 
businesses for working families and in middle-income communities. These 
businesses are also threatened due to the inequitable balance of power 
between the franchisee and franchisor.
  Franchisors should not be allowed to simply pull the rug out from 
under franchisees who have been working diligently and successfully in 
promoting the parent company's product. Some value must be assigned to 
the years of hard work, expertise, and equipment that has been invested 
in the franchise business. Current law, both at the State and Federal 
level, does not sufficiently address this problem.
  The current crisis facing the Canada Dry and Coors distributors in 
the New York metropolitan area is a very clear illustration of this 
problem and over 300 jobs could be lost for our region if the rights of 
franchisees are not protected. After building up distribution routes 
for Canada Dry and Coors over many years, and investing up to $250,000 
per distribution route to buy the equity rights to their franchises, 
these distributors now face the termination of their livelihoods. The 
parent companies in New York have now taken the position that the 
distributors own nothing, despite their prior commitment to the 
distributors that they had equity ownership. The distributors deserve 
much of the credit for making these routes more profitable. This 
legislation would make it

[[Page E551]]

unlawful for franchise companies to sell franchises and 
distributorships, and then take back those franchises without fair 
compensation.
  Franchises employ more than 8 million people nationwide, and account 
for more than 35 percent of U.S. retail sales. Current trends suggest 
this explosion will continue, providing a certain urgency to our cause 
to correct inequities and unfair trade practices sooner, rather than 
later.
  Many issues deserve exploration such as proper disclosure by 
franchisors and parent companies. Our basic goal, however, should be to 
prevent unfair practices that do not properly recognize or compensate 
for the equity ownership rights that many franchisees and distributors 
have in their franchises, and ultimately devalue franchising as a 
successful way of conducting business.

                          ____________________