States Keep Passing Franchise and Distribution Laws, but Focus on Special Industries

This posting was written by John W. Arden.

State legislatures continue to pass a significant number of statutes regulating franchise and distribution arrangements, but have turned their focus to enacting special industry laws rather than generally-applicable laws, according to Richard H. Casper, speaking April 29 at Foley & Lardner’s 19th annual Law of Product Distribution and Franchise Seminar in Milwaukee.

In 2009, the states passed 65 laws enacting or amending distribution statutes. There are currently more than 100 bills affecting the field pending in the legislatures.

Themes of Legislation

Casper identified several themes of legislation, including the enactment of laws (1) increasing restrictions on suppliers, (2) tweaking protections afforded motor vehicle dealerships, (3) focusing on specific industries, and (4) expanding anti-termination measures provided to dealers of motor vehicles and farm and construction equipment to watercraft, recreational vehicle, and lawn and garden equipment dealers.

In contrast, the states generally have shied away from further legislation covering independent sales representatives and farm equipment dealerships. The redraft of Uniform Commercial Code Article 2—proposed by the National Conference of Commissioners on Uniform States Laws in 2003—has not been adopted in any state, Casper said.

Three states and the federal government have adopted statutes requiring restaurant chains to disclose the nutritional content of menu items. This year, New Jersey has amended its Franchise Practices Act to govern franchisees maintaining virtually any kind of location within the state. Previously, the law applied to franchisees that maintained a retail location within New Jersey.

Maryland has expanded the scope of its Equipment Dealer Contract Act to cover heating, ventilation, and air conditioning dealers in the business of selling “on commission or at retail.”

Product Distribution Law Guide

The attorneys in the Foley & Lardner Distribution & Franchise Practice group have authored a one-volume treatise based on the firm’s annual Product Distribution and Franchise seminar. CCH Product Distribution Law Guide, Second Edition discusses distribution issues from both the legal and business perspective, providing practice tips, checklists, and a solutions-oriented approach. Further details about the Guide appear here on the CCH/Wolters Kluwer online store.