Proposed Revisions to Oregon Franchise Law a Lawsuit Waiting to Happen

Foley & Lardner LLP

Foley & Lardner LLPA new bill introduced in the Oregon House of Representatives would make significant changes to the state’s franchise relationship statute, making the law dramatically more onerous for franchisors.  Among the proposed revisions are:

  • Mandatory disclosure of the financial performance or forecasted financial performance of existing franchises to any prospective franchisee;
  • Significant new limits on waiving forum or venue in Oregon, including a limit on arbitration agreements that likely conflicts with the Federal Arbitration Act;
  • A 60 days’ notice and cure period when a franchisee fails to comply with a franchise agreement;
  • A new cause of action for franchisees if a franchisor develops a new location “in close geographical proximity” to an existing location—a term that is not defined—and the existing franchisee suffers a “material adverse effect” in its business;
  • Allowing double or treble damages if a franchisor acts “knowingly or willfully” in violating the statute; and
  • Retroactive application of the new statutory sections.

These changes practically invite franchisees to initiate litigation should a dispute arise with a franchisor.  What franchisee would not roll the dice to collect double or triple damages if a franchisor was terminating their relationship and all that the franchisee must show is that the franchisor acted with knowledge?  The Foley Distribution & Franchise Practice Group will be keeping an eye on this proposal as it makes its way through the legislative process.

The full text of the bill is available here.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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