1Amending Title 12 (Commerce and Trade) of the Pennsylvania
2Consolidated Statutes, requiring responsible franchise
3practices; conferring powers and duties upon the Department
4of Community and Economic Development; and establishing
5remedies and penalties.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Part I of Title 12 of the Pennsylvania
9Consolidated Statutes is amended by adding a chapter to read:

10CHAPTER 9

11RESPONSIBLE FRANCHISE PRACTICES

12Sec.

13901. Scope of chapter.

14902. Declaration of policy.

15903. Definitions.

16904. Administration.

17905. Good faith and fair dealing.

18906. Limited fiduciary duty.

19907. Due care.

1908. Sourcing of goods and services.

2909. Encroachment.

3910. Covenants not to compete.

4911. Illegal provisions.

5912. Trade associations and discrimination.

6913. Unlawful sales practices.

7914 System changes and renewal agreements.

8915. Renewal.

9916. Termination.

10917. Transfer of franchise system.

11918. Remedies.

12919. Penalties.

13§ 901. Scope of chapter.

14This chapter relates to responsible franchise practices.

15§ 902. Declaration of policy.

16The General Assembly finds and declares as follows:

17(1) It is the purpose of this chapter to promote the
18vitality of franchising through fair, equitable and
19responsible franchise practices.

20(2) Franchising has matured into a significant and
21competitive mode of product and service distribution in our
22national economy.

23(3) Traditional common law doctrines have not evolved
24sufficiently to protect franchisees adequately from
25fraudulent or unfair practices in the sale and operation of
26franchised businesses, and significant contractual and
27procedural restrictions have denied franchisees viable legal
28recourse to protect their interests in the businesses.

29(4) For all parties to a franchise, having disputes
30settled under inconsistent and widely varying state laws

1provides little predictability and consistency in how the
2issue will be treated by the courts. A uniform set of
3standards would ensure that all franchisees and franchisors
4be treated the same on a particular issue, regardless of the
5state of operation.

6(5) A franchisor that simply acts in compliance with the
7terms of its franchise contract with a franchisee is not
8necessarily dealing with its franchisee fairly and in good
9faith.

10(6) The doctrine of unconscionability applies to a
11franchise contract.

12(7) The franchisor and the franchisee have the need to:

13(i) make reasonable changes to the franchise system
14to incorporate new and mutually advantageous products,
15technologies and methods of doing business; and

16(ii) accommodate and meet competitive challenges in
17the business in which franchisees operate.

18(8) This chapter shall be liberally construed to carry
19out this section.

20§ 903. Definitions.

21The following words and phrases when used in this chapter
22shall have the meanings given to them in this section unless the
23context clearly indicates otherwise:

24"Advertisement." Any oral or written communication
25disseminated in any medium or otherwise to the public in
26connection with an offer or sale of a franchise.

27"Affiliate." A person controlling, controlled by or under
28common control with another person. The term includes an officer
29and director of the person controlling, controlled by or under
30common control with another person.

1"Area franchise." A franchise between a franchisor and a
2franchisee under which the franchisee is granted the right to
3operate more than one unit within a specified geographic area.

4"Franchise." As follows:

5(1) Any of the following:

6(i) An express or implied agreement between a
7franchisor and a franchisee, whether oral or written, by
8which:

9(A) the franchisee is granted the right to
10offer, sell or distribute goods or services under a
11marketing plan or system prescribed or suggested in
12substantial part by the franchisor;

13(B) the operation of the business is allowed to
14be substantially associated with a trademark, service
15mark, trade name, logotype, advertising or other
16commercial symbol, owned, controlled or used by the
17franchisor; and

18(C) the franchisee is required to pay a
19franchise fee.

20(ii) An area franchise.

21(iii) A subfranchise.

22(iv) A commercial relationship entered into in
23reasonable reliance on representations of the criteria of
24subparagraph (i).

25(v) A commercial relationship explicitly referred to
26as a franchise by the seller.

27(2) The term does not include a nonprofit organization
28operated on a cooperative basis by and for independent
29retailers which wholesales goods and services primarily to
30its member retailers and to which all of the following apply:

1(i) As to control and ownership:

2(A) each member has substantially the same
3control and ownership of the cooperative; or

4(B) control and ownership is apportioned by
5number of retail units owned.

6(ii) Only persons that will avail themselves of the
7services furnished by the organization may be members.

8(iii) Transfer of ownership is prohibited or
9limited.

10(iv) Capital investment receives no return.

11(v) Benefits to members are made on the basis of
12patronage of the cooperative or on the basis of retail
13units owned.

14(vi) A member is not personally liable for
15obligations of the organization in the absence of a
16direct undertaking or authorization by the member.

17(vii) Services of the organization are furnished
18primarily for the use of a member.

19(viii) No part of the receipts, income or profit of
20the organization is paid to a for-profit entity. This
21subparagraph does not include an arms-length payment for
22necessary goods and services.

23(ix) A member is not required to purchase goods or
24services from a designated for-profit entity other than
25an approved supplier selected on an objective basis.

26(3) The term does not include a contract regulated by
27the Petroleum Marketing Practices Act (Public Law 95-297, 15
28U.S.C. § 2801 et seq.).

29"Franchise broker." A person that sells, offers for sale or
30arranges for the sale of a franchise. The term does not include

1a franchisor or franchisee or an employee of a franchisor or
2franchisee.

3"Franchisee." A person that is granted a franchise. The term 
4includes:

5(1) a subfranchisor with regard to the relationship with
6the franchisor; and

7(2) a subfranchisee with regard to the relationship with
8the subfranchisor.

9"Franchise contract." A contract to implement a franchise.
10The term includes a document ancillary to the contract or to the
11franchise.

12"Franchise fee." Any payment or agreement to pay for the
13right to enter into or continue in a franchise. The term
14includes payment for goods or services. The term does not
15include any of the following:

16(1) The purchase or agreement to purchase goods at a
17good faith wholesale price if the purchaser has no obligation
18to:

19(i) purchase more goods than a reasonable person
20normally would purchase as a starting inventory; or

21(ii) maintain an ongoing inventory or supply.

22(2) Payment of a reasonable service charge to the issuer
23of a credit card by an establishment accepting or honoring
24the credit card.

25(3) Payment to a trading stamp company by a person
26issuing trading stamps in connection with a retail sale.

27"Franchisor." A person that grants a franchise. The term
28includes:

29(1) an affiliate of the person; and

30(2) unless stated otherwise in this chapter, a

1subfranchisor with regard to its relationship with the
2franchisee.

3"Good faith." Honesty in fact and the observance of
4reasonable commercial standards of fair dealing.

5"Marketing plan." A plan or system concerning a material
6aspect of conducting business. Indicia of a marketing plan
7include:

8(1) Price specification, special pricing system or
9discount plans.

10(2) Sales or display equipment or merchandising devices.

11(3) Sales techniques.

12(4) Promotional or advertising materials or cooperative
13advertising.

14(5) Training regarding the promotion, operation or
15management of the business.

16(6) Operational, managerial, technical or financial
17guidelines or assistance.

18"Material." The term includes:

19(1) Anything of a nature which a reasonable individual
20would consider important in making a decision relating to,
21entering into, remaining in or abandoning a franchise
22relationship.

23(2) Anything of a nature which has actual or potential
24significant financial impact on a franchisor, franchisee or
25prospective franchisee.

26"Reasonable current qualifications." Qualifications based
27upon legitimate business reasons.

28"Sale of a franchise." As follows:

29(1) The term includes a material modification of an
30existing franchise, whether upon renewal or otherwise.

1(2) The term does not include the sale of an existing
2franchise by the franchisee if all of the following apply:

3(i) Neither the franchisor nor an owner or affiliate
4has an ownership interest in the selling party.

5(ii) The sale is not effected by or through the
6franchisor or its affiliate. A sale is not effected
7through a franchisor if the franchisor's involvement in
8it is limited to approving the prospective new
9franchisee.

10(3) The term does not include the renewal or extension
11of an existing franchise if there is no interruption in the
12operation of the franchised business by the franchisee.

13"Skill and knowledge." A special level of expertise which:

14(1) is beyond the minimum level of skill or knowledge
15required of a person engaging in a service or business and
16involves a special level of expertise;

17(2) is the result of:

18(i) acquired learning and aptitude developed by
19special training and experience in the business to be
20conducted under the franchise; or

21(ii) extensive use and experience with the products
22or services or the operating system of the franchise;

23(3) is the result of experience in organizing a
24franchise system and in providing training, assistance and
25services to franchisees; and

26(4) would be expected by a prospective franchisee in
27reasonable reliance on the written and oral commitments and
28representations of the franchisor.

29"Subfranchise." An agreement under which a franchisor gives
30a person the right to sell or negotiate the sale of franchises.

1A contract or agreement which is a franchise does not become a
2subfranchise merely because, under the terms of the contract or
3agreement, a person is granted the right to receive compensation
4for referrals to a franchisor or subfranchisor or to receive
5compensation for acting as a sales representative on their
6behalf.

7"Subfranchisee." A person that is granted a franchise by a
8subfranchisor.

9"Subfranchisor." A person that is granted a subfranchise by
10a franchisor.

11§ 904. Administration.

12(a) Powers.--The department has the following powers to
13carry out this chapter:

14(1) Promulgate regulations.

15(2) Prescribe forms.

16(3) Initiate prosecutions under section 919(b) (relating
17to penalties).

18(b) Duties.--The department has the following duties to
19carry out this chapter:

20(1) Inform the public of the provisions of this chapter.

21(2) Investigate complaints and possible violations of
22this chapter and of regulations under this chapter.

23§ 905. Good faith and fair dealing.

24(a) Good faith.--

25(1) A franchise contract imposes on each party a duty to
26act in good faith in its performance and enforcement. The
27duty under this paragraph:

28(i) prohibits each party to the franchise from
29taking action which will have the effect of destroying or
30injuring the right of the other party to receive the full

1expected benefits of the contract; and

2(ii) obligates each party to the franchise to do
3everything required under the contract to accomplish the
4purpose.

5(2) An action which prevents enjoyment, even if not
6prohibited by the express terms of the contract, is
7prohibited.

8(b) Fair dealing.--Franchisors and franchisees shall act in
9a fair equitable manner toward each other so as to guarantee
10freedom from wrongfulness, arbitrariness, coercion and duress by
11the other party.

12§ 906. Limited fiduciary duty.

13Without regard to whether a fiduciary duty is imposed
14generally on the franchisor by virtue of a franchise
15relationship, the franchisor owes a fiduciary duty to its
16franchisee and is obligated to exercise the highest standard of
17care in all of the following:

18(1) Performing bookkeeping, collections, payroll or
19accounting services on behalf of the franchisee. The
20franchisor may only use the information concerning the
21franchised business gained while performing the services
22under this paragraph for good faith and legitimate business
23purposes. As used in this paragraph, the term "good faith and
24legitimate business purposes" does not include competition
25with the franchisee.

26(2) Administering or supervising the administration of
27an advertising or promotional fund to which the franchisee is
28required to make contributions. The following apply to a fund
29under this paragraph:

30(i) The fund:

1(A) shall be kept in a segregated account; and

2(B) shall not be subject to the claim of a
3creditor of the franchisor.

4(ii) The franchisor shall, at the franchisor's own
5expense, provide an independent certified audit of the
6fund within 60 days following the close of the
7franchisor's fiscal year. The audit shall fully disclose
8all fees, expenses or other payments from the fund to the
9franchisor.

10§ 907. Due care.

11(a) Duty.--A franchisor is required to exercise the skill
12and knowledge normally possessed by franchisors in good standing
13in the same or similar types of business. A franchisor may
14satisfy this subsection by:

15(1) contracting for, hiring or purchasing skill and
16knowledge;

17(2) either:

18(i) incorporating skill and knowledge in the
19franchise; or

20(ii) communicating or providing skill and knowledge
21to the franchisee.

22(b) System standards.--Franchisors and franchisees are
23mutually required to conform to clearly established systemwide
24standards of operation which are not arbitrarily promulgated or
25enforced.

26(c) Training and assistance.--Franchisors shall provide each
27franchisee with initial training and continuing commercial or
28technical assistance during the entire life of the agreement.

29§ 908. Sourcing of goods and services.

30(a) Scope of section.--This section shall apply to all goods

1and services which the franchisee is required to obtain, whether
2or not they are related to a trademark, trade name, trade
3secret, or patent owned, used or controlled by or licensed to
4the franchisor or its affiliate.

5(b) Franchisee's choice.--

6(1) Except as set forth in paragraph (2), a franchisor
7may not prohibit or restrict a franchisee from obtaining
8equipment, supplies, goods or services used in the
9establishment or operation of the franchised business from
10sources of the franchisee's choosing.

11(2) Goods and services may be required to meet
12established uniform systemwide quality standards which are
13not arbitrarily promulgated or enforced by the franchisor.

14(c) Lists.--Without limiting the rights of the franchisee
15under subsection (b), a franchisor shall provide and
16continuously update an inclusive list of suggested vendors for
17all goods and services related to the business.

18(d) Benefits of purchasing.--

19(1) A franchisor shall fully disclose whether or not it
20receives any rebate, commission or other benefit as a result
21of the purchase of goods or services by a franchisee.

22(2) A rebate, commission or benefit under paragraph (1)
23shall be remitted to the franchisee that made the purchase.

24(e) Reports.--The franchisor shall at least annually, using
25generally accepted accounting principles, report the amount of
26revenue and profit it earns from the sale of goods and services
27to the franchisee and to subfranchisees.

28§ 909. Encroachment.

29(a) Notice.--A franchisor, prior to granting or licensing a
30new franchise or opening a new channel of distribution, shall

1provide at least 120 days' written notice to all franchisees in
2proximity of the proposed new franchise or channel of
3distribution.

4(b) Proximity.--A franchisor may not grant or license a new
5franchise or otherwise establish a new channel of distribution
6for goods or services if paragraphs (1) and (2) apply:

7(1) The goods or services are similar to those:

8(i) offered by a franchisee; and

9(ii) identified by the same trade name, trademark,
10logotype, commercial system or advertising:

11(A) used by a franchise; or

12(B) owned or managed by an entity related to the
13franchisor.

14(2) The new franchise or new channel of distribution is
15in unreasonable proximity to an outlet or business owned or
16licensed to the franchisee so that the effect or probable
17effect of operating the new franchise or new channel of
18distribution is to cause a reduction in gross sales of the
19existing franchise.

20(c) Liability.--Except as set forth in subsection (d), the
21following apply:

22(1) A franchisor that violates subsection (b) is liable
23to the injured franchisee for damages, including:

24(i) loss of income resulting from the reduction in
25gross sales; and

26(ii) reduction in value of the franchised business.

27(2) A franchisee may obtain injunctive relief against a
28franchisor that violates subsection (b).

29(3) A franchisee that prevails in an action under this
30subsection shall be awarded:

1(i) costs of litigation; and

2(ii) reasonable attorney fees.

3(d) Exception.--Subsection (c) shall not apply if paragraphs
4(1) and (2) apply:

5(1) The reduction in gross sales for an existing
6franchise caused by the operation of the new franchise or new
7channel of distribution, based on a comparison to annual
8gross sales from the same franchise location during the 12-
9month period immediately preceding the initial operation of
10the new franchise or new channel of distribution, is
11determined to have been less than 10% during the first 12
12months following the initial operation of the new franchise
13or new channel of distribution.

14(2) The franchisor agrees to compensate the existing
15franchisee for market sales diverted by the opening of the
16new franchise or new channel of distribution in accordance
17with the following:

18(i) The franchisor and franchisee must agree upon
19the proper amount of the compensation to be provided.

20(ii) If there is no agreement under subparagraph
21(i), the following apply:

22(A) Each party shall appoint an independent
23appraiser to determine the amount of the
24compensation.

25(B) If the independent appraisers are unable to
26agree on the appropriate amount of the compensation,
27the independent appraisers shall appoint a third
28appraiser to determine the level of compensation.

29(C) The determination of the independent
30appraiser shall be final and binding.

1(e) Affirmative defense.--It is an affirmative defense to an
2action under subsection (c) that the decline in sales of an
3existing franchise occurred from a reason other than the
4operation in unreasonable proximity to the existing franchise of
5the new franchise or new channel of distribution.

6§ 910. Covenants not to compete.

7(a) Prohibition.--Except as set forth in this section, a
8franchisor may not enter into a contract to prohibit the
9franchisee from engaging in business at a location after the
10franchise expires or is terminated under section 916 (relating
11to termination).

12(b) Purchase of assets.--

13(1) This section shall not apply if the franchisor, at
14least 30 days before the effective date of expiration or
15termination under section 916 pursuant to a written offer,
16purchases the assets of the franchised business for its fair
17market value as a going concern. The fair market value of the
18business must be:

19(i) ascertained by an impartial appraiser acceptable
20to both parties; and

21(ii) determined as if the business were to be resold
22or renewed for a period of years equal to the contract
23term being offered by the franchisor for new or renewed
24franchisees.

25(2) Forgiveness of debt shall not be considered a
26purchase of assets.

27(3) Upon nonrenewal under section 915(b)(2)(iii)
28(relating to renewal), a covenant under this paragraph shall
29be void.

30(c) Protection of business of franchisor.--This section

1shall not apply to a franchise contract obligating a franchisee,
2after expiration, termination or transfer of a franchise, to do
3any of the following:

4(1) Cease using any trademark, trade secret or other
5intellectual property owned by the franchisor or its
6affiliate.

7(2) Alter the appearance of the premises and the manner
8of operation of the franchise business to avoid any
9likelihood of confusion as to the affiliation of the business
10with its former franchisor.

11§ 911. Illegal provisions.

12(a) Waiver.--A provision in a franchise contract which
13requires a franchisee or prospective franchisee to waive a
14provision of this chapter or a regulation under this chapter is
15void.

16(b) Judicial forum.--A provision in a franchise contract
17which obligates a franchisee to mediate, arbitrate or litigate a
18claim or controversy under the franchise contract in a forum
19outside the state in which the franchised business is located
20shall be deemed to be in violation of this chapter and void.

21§ 912. Trade associations and discrimination.

22(a) Trade associations.--

23(1) A franchisor may not do any of the following:

24(i) Prohibit a franchisee from joining a trade
25association.

26(ii) Retaliate or discriminate against a franchisee
27for joining a trade association.

28(2) A trade association of franchisees shall not be
29subject to any applicable antitrust law of this Commonwealth.

30(3) Neither the existence of nor membership in a trade

1association of franchisees shall be construed to be in
2restraint of trade.

3(b) Discrimination.--

4(1) Except as set forth in paragraph (2), a franchisor
5may not discriminate against a franchisee or prospective
6franchisee in the sale, renewal or approval of the transfer
7of a franchise on the basis of race, color, religion, gender,
8sexual preference, age, national origin or disability.

9(2) This subsection does not prohibit a franchisor from
10making franchise opportunities available to individuals
11lacking the capital, training, business experience or other
12qualifications ordinarily required of its franchisees,
13pursuant to a good faith affirmative action or similar
14program adopted by the franchisor.

15§ 913. Unlawful sales practices.

16(a) Franchises.--A person may not do any of the following in
17connection with the advertising, offering, sale or other
18promotion of a franchise:

19(1) Employ any device, scheme or artifice to defraud.

20(2) Engage in any act, practice, course of business or
21pattern of conduct which operates or is intended to operate
22as a fraud or deceit on a person.

23(3) Make an untrue statement of a material fact, omit a
24material fact or omit a material fact necessary in order to
25make the statement, in light of the circumstances under which
26it is made, not misleading.

27(4) Represent or imply that a franchise has been
28endorsed, recommended or approved by a Federal or state
29agency or officer.

30(b) Disclosure.--A person may not do any of the following in

1connection with a presale franchise disclosure document required
2by statute or regulation:

3(1) Make an untrue statement of material fact, omit a
4material fact or omit a material fact necessary to make a
5statement, in light of the circumstances under which it is
6made, not misleading.

7(2) Fail to furnish a prospective franchisee with all
8information required to be disclosed at the time and in the
9manner required by regulation of the department or other
10applicable law.

11(3) Make a representation to a prospective franchisee
12which is inconsistent with or contradicts information
13provided to the prospective franchisee in a required
14disclosure.

15(4) Make a statement of fact which has the purpose or
16effect of misrepresenting:

17(i) the profitability of a franchise opportunity;

18(ii) the rate of success of franchises or
19franchisees associated with a franchise opportunity;

20(iii) the expected market value of the franchise;

21(iv) the equity the franchisee will accumulate in
22the franchised business; or

23(v) the rate of success of franchises generally.

24(c) Burden of proof.--In a criminal action under this
25section it shall be an affirmative defense that:

26(1) the franchisor's statement or representation is
27accurate and not misleading; and

28(2) there was a reasonable basis in fact for the
29franchisor's statement or representation at the time it was
30made.

1§ 914. System changes and renewal agreements.

2A franchise contract may not be changed to do any of the
3following:

4(1) Change the franchisee fee, royalty rates or other
5material financial terms of the franchise relationship.

6(2) Operate to materially change, abrogate or deprive
7the franchisee of the intended benefits of the franchise
8contract.

9§ 915. Renewal.

10(a) Fee.--A franchisor may impose a reasonable renewal
11franchise fee be paid to reimburse the franchisor for the
12franchisor's reasonable and actual expenses directly
13attributable to the renewal.

14(b) Authority.--

15(1) A franchisor must provide the franchisee at least
16six months' written notice of intent not to renew.

17(2) Except as set forth in subsection (c), a franchisor
18may refuse to renew a franchise contract if one of the
19following applies:

20(i) Termination of the franchise contract would be
21permitted under section 916 (relating to termination).

22(ii) The franchisor and the franchisee agree in
23writing not to renew the franchise contract.

24(iii) The franchisor:

25(A) withdraws from distributing its products or
26services through franchises in the geographic market
27served by the franchisee; or

28(B) ceases to offer new franchises.

29(c) Prohibitions.--

30(1) A franchisor may not impose as a condition of

1renewal that the franchisee cease to own or operate an
2independent business not within an unreasonable proximity of
3the franchised business.

4(2) A franchisor may not refuse to renew a franchise
5contract for the purpose of converting the franchisee's
6business to operation by the franchisor or by an affiliate of
7the franchisor.

8§ 916. Termination.

9(a) Good cause.--A franchisor may not terminate a franchise
10contract or substantially change the competitive circumstances
11of the franchise prior to the expiration of its terms except for
12good cause which is:

13(1) based on a legitimate and good faith business
14reason; and

15(2) not arbitrary or capricious under practices of and
16the requirements imposed by the franchisor in other similar
17circumstances.

18(b) Obligations.--Prior to termination under this section, a
19franchisor must do all of the following:

20(1) Specify the precise basis for the proposed
21termination. This paragraph includes a description of the
22material terms of the franchise contract with which the
23franchisee is not in compliance.

24(2) Except as set forth in subsection (c), provide to
25the franchisee a reasonable period of time, of at least 30
26days but not more than 90 days, to:

27(i) cure nonfinancial events of default; and

28(ii) pay money due to the franchisor or its
29affiliate.

30(3) Offer to purchase from the franchisee the

1franchisee's current inventory meeting the franchisor's then-
2present standards and held for sale in accordance with the
3franchise contract at the higher of:

4(i) wholesale value; or

5(ii) the franchisee's cost.

6(c) Cure and settlement exceptions.--A franchisor need not
7provide an opportunity under subsection (b)(2) if any of the
8following apply:

9(1) The franchisee:

10(i) is declared bankrupt;

11(ii) is judicially determined to be insolvent; or

12(iii) makes an assignment for the benefit of
13creditors.

14(2) The franchisee voluntarily abandons the franchised
15business for five consecutive days. This paragraph shall not
16apply if the abandonment is the result of a natural disaster
17or other cause beyond the control of the franchisee.

18(3) After reasonable notice, the franchisee operates the
19franchised business in a manner which imminently endangers
20the public health and safety.

21(4) The franchisee:

22(i) is sentenced for a felony which materially and
23adversely affects the operation, maintenance and goodwill
24of the franchised business in the relevant market; and

25(ii) within 90 days of sentencing, does not transfer
26the franchise under section 917 (relating to transfer of
27franchise system).

28§ 917. Transfer of franchise system.

29(a) Authority.--

30(1) A franchisor may transfer its interest in a

1franchise to an entity with the business experience and
2financial means to perform all of the franchisor's
3obligations in the ordinary course of business.

4(2) A franchisor must provide at least 30 days' advance
5notice to every franchisee of the intent to transfer its
6interest in the franchise. The notice must be accompanied by
7a complete description of the business and financial terms of
8the proposed transfer or transfers.

9(b) Assignment.--If a franchisor transfers all or a major
10portion of the franchise system to another person, all of the
11following apply:

12(1) The transferee shall:

13(i) assume the franchisor's obligations to the
14franchisee; or

15(ii) renegotiate in good faith the franchisor's
16obligations to the franchisee.

17(2) The transferee shall be liable for the obligations
18of the franchisor.

19(c) Noncompliance.--If a transferee fails to comply with
20subsection (b)(1), the franchisee may rescind the franchise
21contract if the franchisee:

22(1) ceases from using the franchisor's trademarks,
23logotypes and other express identification; and

24(2) alters the appearance of the premises and the manner
25of operation of the franchised business to avoid the
26likelihood of confusion as to the affiliation of the business
27with the franchise system.

28§ 918. Remedies.

29(a) Relief.--A person that violates this chapter or a
30regulation of the department shall be liable to the franchisee

1for legal and equitable relief.

2(b) Costs and attorney fees.--A court may award costs and
3attorney fees to a prevailing franchisee under subsection (a).

4§ 919. Penalties.

5(a) Civil.--A person that violates this chapter or a
6regulation under this chapter shall be liable to the injured
7person for a civil penalty of at least $2,500 for each
8violation, which shall be assessed and recovered in a civil
9action brought in any court of competent jurisdiction.

10(b) Criminal.--A person that intentionally violates this
11chapter commits a misdemeanor of the first degree.

12Section 2. The addition of 12 Pa.C.S. Ch. 9 shall apply to
13franchise contracts initiated or renewed on or after the
14effective date of this section.

15Section 3. This act shall take effect in 60 days.