HB134 Alabama 2019 Session

Summary

Primary Sponsor

Andrew SorrellAuditor

Republican

Session

Regular Session 2019

Title

Protect Alabama Small Businesses Act, regulation of franchisers and representatives in effort to prevent fraud, unfair business practices and abuses on franchisees, penalties

Summary

The Protect Alabama Small Businesses Act would regulate franchisors and franchise relationships to curb fraud and unfair practices, and require fair buyback and compensation when franchises end.

What This Bill Does

If enacted, franchisors would be required to terminate or not renew a franchise only for good cause, with a cure period for noncompliance. If termination or nonrenewal occurs without good cause, the franchisor must repurchase the franchise's inventory, supplies, goods, fixtures, equipment, and furnishings at fair market value, and may either purchase the goodwill or waive the noncompete so the business can continue. The act also tightens sale and transfer rules, requires non-discriminatory and reasonable consent for transfers, and protects heirs and ongoing operations. It provides civil remedies, attorney fees, injunctive relief, and potential punitive damages, with enforcement by the Attorney General, and applies to all franchise agreements.

Who It Affects

• Franchisees and their heirs or successors, who gain protections against unfair terminations, guidance on transfers, and rights to fair compensation and repurchase of franchise assets.
• Franchisors and their affiliates (including area franchisors and area franchisees), who would be subject to new conduct rules, mandatory asset repurchases, transfer approval requirements, and potential liability for violations.

Key Provisions

• Establishes the Protect Alabama Small Businesses Act and applies it to all franchise agreements.
• Requires franchisors to terminate or refuse renewal only for good cause, with a cure period unless immediate termination is allowed by specified events.
• Mandates repurchase at fair market value of inventory, supplies, goods, fixtures, equipment, and furnishings upon termination/nonrenewal/expiration without good cause; requires purchase of goodwill or waiver of noncompete to allow the franchisee to continue operating.
• Governs transfer and sale of franchises, allowing transfer with prior consent but prohibiting unreasonable withholding; includes notice and a 60-day deemed-approval timeline; protects rights of heirs and estates.
• Outlaws misrepresentation and imposes duties of good faith and fair dealing; prohibits certain unfair practices and specifies penalties, including civil liability and potential punitive damages; enforcement by the Attorney General.
• Provides remedies including damages, attorney fees, injunctive relief, and declaratory judgments; allows for arbitration if standards are met; venue protections favor Alabama matters.
• Addresses jurisdiction, successor liability, and relation to local ordinances; outlines effective date and ensures applicability to existing and future franchise arrangements.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Small Business