Franchisee protection bill dies in the House; LLC partnership changes retroactive; Business Entity Code modernization effective next year

Senate legislation intended to protect franchisees from unjust termination and non-renewal died in the Alabama House.

Although the House Commerce and Small Business Committee conducted a public hearing on SB129, the legislation was never put to a committee vote. The bill also would have facilitated sales and transfers of franchises and allowed grievances to be aired in Alabama courts.

Sen. Chris Elliott, R-Fairhope, a former franchise owner and the bill’s author, said his Protect Alabama Small Businesses Act would have ended the “take it or leave it” franchisor stance, which causes franchisees to assume more and more at each contract renewal.

Franchisor supporters argued that the legislation limited brand protection and dictated the same contract terms for varying kinds of franchises, including restaurants, cleaning businesses, home health services and mosquito treatment programs.

Industries that already have franchise relations protection, such as tractor, lawn and garden suppliers, beer wholesalers and vehicle and heavy equipment dealers, would have been exempt from the legislation.

Similar legislation – HB352 and HB134 – also did not make it through the legislative process.

Act No. 2019-304 by Rep. Bill Poole, R-Tuscaloosa, amends revisions the Legislature made last year to the Alabama LLC law, primarily related to the definition of partnerships. The changes are retroactive to Jan. 1, 2019.

The governor signed into law a more than 400-page modernization of the Alabama Business and Nonprofit Entity Code for corporations that better aligns state law with current federal law.

Act No. 2019-94 by Poole and Sen. Sam Givhan, R-Huntsville, takes effect Jan. 1, 2020.

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