Champion of ‘little guy’ toils on, some say to industry’s harm
“I’m a little guy,” maintains Keith Miller, and as owner of three Subway stores in Sacramento that’s true. But as chairman of the Coalition of Franchisee Associations, Miller has dropped a big bomb.
It’s a bill in Maine called the Small Business Investment Protection Act—deliberately titled to sound like the champion of the little company, and backed by the coalition and its 19 members, including several large franchisee associations.
Miller believes the bill is a long overdue correction of the franchisor and franchisee relationship, in which the balance of power has shifted too far to the former. “It’s gone from a 10-page agreement to a 40- to 50-page agreement,” he says about the standard contract that binds the two parties. “I’m pretty sure nothing in those extra 40 pages gives any benefits to the franchisee.”
Miller considers the Maine bill the coalition’s largest triumph this year, better than action in California, Rhode Island and Massachusetts where coalition-backed bills are also pending.
But to Dean Heyl, who lobbies in the states for the International Franchise Association, Legislative Bill 1458, as it is named, is an abomination. “It is probably the worst piece of legislation ever introduced,” Heyl says. “It would completely unravel the franchise agreements that franchisees and franchisors enter into.”
Heyl rails against the name as misleading. “It sounds like apple pie and grandma,” he says. He sputters about what he calls its stealthy introduction, after he and the IFA’s outside attorney thought the Maine effort was dead. Mostly, he paints an apocalyptic picture of what the bill would do if signed into law: “Now, you basically have anarchy, because all the franchise agreements have been negated by this law.”
Heyl launched an all-out effort to galvanize franchisors and franchisees to show up in force in Maine and squash the bill, which was scheduled for committee hearings in May and faces a mid-June legislative adjournment deadline.
Despite their different positions, Miller doesn’t see himself as against the IFA. Nor is he against franchisors in general. In particular, he says, he respects Fred DeLuca, the founder of Subway and his franchisor. “As a founder, he loves Subway. He bleeds Subway. He truly cares about Subway,” Miller says. But even to Subway franchisees, he points out what they believe to be protections in their relationship actually don’t exist in their contracts.
Miller outlines three facets of the Maine bill, which he says is based on the coalition’s model legislation that was first introduced in California last year. The most important to him may be boosting franchisee rights around renewal and termination. “You put 20 years of sweat equity into this business, and unless you’re doing something seriously wrong, you are the one who built the business and you should be able to have due process,” he says.
“We’re in an environment where the franchisee can almost never exert their rights,” he says, and that’s so even for multi-unit franchisees. “In relationship to their franchisor they’re still a little guy.”
Miller rejects the suggestion that the coalition’s efforts are harming the industry. “Why would we want to hurt franchising? That’s how we make our living,” he says.
But to Heyl, new regulations do cause harm. “Our whole overriding deal is, government intervention is the least desirable thing out there,” he says. “Once you get government into your business, it’s going to be exceptionally hard to get it out.”
Although this year’s legislative brawls are nearing the end, this looks like one fight set to wage on.
Beth Ewen is managing editor of Franchise Times. Send interesting legal and public policy cases to firstname.lastname@example.org.