PRINTER'S NO. 2100
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1591
Session of
2017
INTRODUCED BY DALEY, JUNE 21, 2017
REFERRED TO COMMITTEE ON COMMERCE, JUNE 21, 2017
AN ACT
Amending Title 12 (Commerce and Trade) of the Pennsylvania
Consolidated Statutes, in commercial protection, providing
for franchises.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 12 of the Pennsylvania Consolidated
Statutes is amended by adding a chapter to read:
CHAPTER 55
FRANCHISES
Subchapter
A. Preliminary Provisions
B. Payment Processing Services
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
5501. Scope of chapter.
5502. Definitions.
§ 5501. Scope of chapter.
This chapter relates to franchises.
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§ 5502. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Area franchise." A franchise in which a subfranchisor is
granted the right, for consideration given in whole or in part
for the right, to sell or negotiate the sale of a franchise in
the name or on behalf of the franchisor.
"Franchise." As follows:
(1) Any of the following:
(i) An express or implied agreement between a
franchisor and a franchisee, whether oral or written,
which includes all the following:
(A) The franchisee is granted the right to
offer, sell or distribute goods or services under a
marketing plan or system prescribed or suggested in
substantial part by the franchisor.
(B) The operation of the business is allowed to
be substantially associated with a trademark, service
mark, trade name, logotype, advertising or other
commercial symbol owned, controlled or used by the
franchisor.
(C) The franchisee is required to pay a
franchise fee.
(ii) An area franchise.
(iii) A franchise involving a subfranchisor.
(iv) A commercial relationship entered into in
reasonable reliance on representations of the criteria of
subparagraph (i).
(2) The term does not include any of the following:
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(i) A nonprofit organization operated on a
cooperative basis by and for independent retailers which
wholesales goods and services primarily to the
organization's member retailers and to which all of the
following apply:
(A) Each member has substantially the same
control and ownership of the cooperative control and
ownership is apportioned by number of retail units
owned.
(B) Only persons that will avail themselves of
the services furnished by the organization may be
members.
(C) Transfer of ownership is prohibited or
limited.
(D) Capital investment receives no return.
(E) Benefits to members are made on the basis of
patronage of the cooperative or on the basis of
retail units owned.
(F) A member is not personally liable for
obligations of the organization in the absence of a
direct undertaking or authorization by the member.
(G) Services of the organization are furnished
primarily for the use of a member.
(H) No part of the receipts, income or profit of
the organization is paid to a for-profit entity. This
subparagraph does not include an arms-length payment
for necessary goods and services.
(I) A member is not required to purchase goods
or services from a designated for-profit entity other
than an approved supplier selected on an objective
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basis.
(ii) A contract regulated by the Petroleum Marketing
Practices Act (Public Law 95-297, 15 U.S.C. § 2801 et
seq.).
(iii) A contract or business relationship between a
contractor and an automobile club that is a corporation
not-for-profit and that:
(A) directs or refers the automobile club's
members and other customers to the contractor for
roadside assistance, auto battery, auto repair, auto
body repair or other motor-vehicle-related services;
or
(B) authorizes the contractor to display the
automobile club's trademark, service mark or other
commercial symbol as an indication of the
contractor's affiliation with the automobile club.
(iv) An equipment dealer which is a person,
partnership or corporation that is primarily engaged in
the business of retail sales of any of the following:
(A) Farm and utility equipment.
(B) Forestry equipment.
(C) Industrial and construction equipment.
(D) Farm implements.
(E) Farm machinery.
(F) Yard and garden equipment.
(G) Attachments, accessories and repair parts.
(3) The term does not apply to any of the following:
(i) A distribution agreement under section 431 of
the act of April 12, 1951 (P.L.90, No.21), known as the
Liquor Code.
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(ii) A contract regulated by the act of December 22,
1983 (P.L.306, No.84), known as the Board of Vehicles
Act.
"Franchisee." A person who is granted a franchise.
"Franchisor." A person who grants a franchise.
"Payment processing service." A financial service involving
an electronic credit card, a credit card, a credit
identification, a debit card, a prepaid card or another
transaction authorization card.
"Person." An individual, corporation, partnership, limited
liability company, joint venture, association, joint stock
company, trust or an unincorporated organization.
"Subfranchisee." A person who is granted a franchise by a
subfranchisor.
"Subfranchisor." A franchisee that has the right to sell or
subdivide the franchise to a subfranchisee while having and
retaining all or part of the franchisor's interest or rights
under the franchise with the subfranchisee.
SUBCHAPTER B
PAYMENT PROCESSING SERVICES
Sec.
5511. Scope of subchapter.
5512. Standards for payment processing services.
5513. Unfair trade practices.
§ 5511. Scope of subchapter.
This subchapter relates to payment processing services
involving franchises.
§ 5512. Standards for payment processing services.
(a) General rule.--Subject to subsection (b), a franchisor
may establish reasonable and specific written standards
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regarding the nature and quality of a payment processing service
or a provider of payment processing services used or to be used
by a franchisee.
(b) Exception.-- Notwithstanding subsection (a), a franchisor
may not restrain a franchisee, directly or indirectly, from
using a provider of payment processing services of the
franchisee's choosing if the payment processing services
constitute, or could be reasonably anticipated to constitute, a
substantial amount of the franchisee's commercial transactions.
§ 5513. Unfair trade practices.
A violation of a provision of this chapter shall constitute
an unfair method of competition and unfair or deceptive act or
practice within the meaning of section 2(4) of the act of
December 17, 1968 (P.L.1224, No.387), known as the Unfair Trade
Practices and Consumer Protection Law, and shall be subject to
the enforcement provisions, civil penalties and private rights
of action contained in the Unfair Trade Practices and Consumer
Protection Law.
Section 2. This act shall take effect in 60 days.
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