Florida Senate - 2017                                     SB 750
       By Senator Latvala
       16-00129B-17                                           2017750__
    1                        A bill to be entitled                      
    2         An act relating to franchises; creating s. 686.101,
    3         F.S.; providing a short title; creating s. 686.102,
    4         F.S.; providing legislative findings and intent;
    5         providing construction; creating s. 686.103, F.S.;
    6         defining terms; creating s. 686.104, F.S.; prohibiting
    7         a franchisor from terminating a franchise under
    8         certain circumstances; providing limitations on what
    9         constitutes good cause; providing that immediate
   10         notice of termination of a franchise for specified
   11         reasons under certain circumstances is reasonable;
   12         creating s. 686.105, F.S.; providing that a franchise
   13         is deemed to be continuing under certain
   14         circumstances; prohibiting a franchisor from refusing
   15         to renew a franchise unless specified criteria have
   16         been met; authorizing a franchisor to require a
   17         franchisee to meet specified requirements; authorizing
   18         a franchisee to file an action or to request
   19         arbitration under certain circumstances; requiring a
   20         franchise and other related agreements to continue in
   21         effect under certain circumstances; creating s.
   22         686.106, F.S.; prohibiting a franchisor from denying
   23         certain persons the opportunity to participate in the
   24         ownership of a franchise for a specified period after
   25         the death of the franchisee or the person controlling
   26         a majority interest; requiring specified persons to
   27         meet certain requirements or to sell, transfer, or
   28         assign the franchise after the death of the franchisee
   29         or the person controlling a majority interest;
   30         authorizing a franchisee to sell, transfer, or assign
   31         a franchise, specified assets, or an interest in the
   32         franchisee under certain circumstances; prohibiting a
   33         franchisor from preventing a franchisee from selling
   34         or transferring a franchise, assets of the franchise
   35         business, or an interest in the franchisee under
   36         certain circumstances; requiring the franchisor to
   37         make available and to apply specified requirements for
   38         the approval of new or renewing franchises, under
   39         certain circumstances; requiring a franchisee to
   40         notify a franchisor of certain intent; providing
   41         notice requirements; providing application
   42         requirements for the proposed purchaser, transferee,
   43         or assignee of a franchise, certain assets, or an
   44         interest in the franchisee, under certain
   45         circumstances; requiring a franchisor to notify a
   46         franchisee of the approval status of a proposed sale,
   47         assignment, or transfer within a specified timeframe;
   48         providing notice requirements; requiring that a
   49         franchisor’s decision in a claim against a franchisor
   50         be a question of fact; providing that a summary
   51         judgment is not prohibited under certain
   52         circumstances; providing that certain provisions do
   53         not prohibit a franchisor from exercising a
   54         contractual right of first refusal under certain
   55         circumstances; creating s. 686.107, F.S.; providing
   56         that a franchisee must have the opportunity to
   57         monetize certain equity from the franchise business
   58         under certain circumstances; requiring the repurchase
   59         by a franchisor of certain inventory, supplies,
   60         equipment, good will, and furnishings upon
   61         termination, nonrenewal, or expiration of a franchise
   62         subject to certain requirements; providing exceptions;
   63         authorizing a franchisor to offset money owed to a
   64         franchisee for the repurchase of certain items with
   65         money owed by the franchisee to the franchisor;
   66         providing applicability; providing that a franchisor
   67         is civilly liable for failing or refusing to
   68         repurchase certain inventory, supplies, equipment,
   69         good will, and furnishings under specified
   70         requirements upon termination, nonrenewal, or
   71         expiration of a franchise; creating s. 686.108, F.S.;
   72         requiring the repurchase by a franchisor of certain
   73         inventory, supplies, equipment, good will, and
   74         furnishings upon the death or incapacity of a
   75         franchisee or person controlling a majority interest
   76         under certain circumstances; providing an exception;
   77         providing applicability; creating s. 686.109, F.S.;
   78         requiring a franchisor to indemnify a franchisee under
   79         certain circumstances; creating s. 686.111, F.S.;
   80         requiring a franchisor or subfranchisor and a
   81         franchisee to deal with each other in good faith;
   82         providing that it is a violation of certain provisions
   83         for a franchisor to act arbitrarily, capriciously, in
   84         bad faith, or unconscionably under specified
   85         circumstances; providing that it is a violation of
   86         certain provisions for a franchisor and subfranchisor
   87         to restrict or inhibit specified rights of
   88         franchisees; prohibiting a franchisor from
   89         intentionally misrepresenting or failing to disclose
   90         specified information; providing that certain
   91         violations constitute a misdemeanor of the second
   92         degree; providing penalties; providing that a person
   93         may be awarded certain damages, attorney fees, and
   94         other costs under specified circumstances; providing
   95         that certain actions are deemed unfair and deceptive;
   96         authorizing the Department of Legal Affairs by itself
   97         or jointly with the Department of Agriculture and
   98         Consumer Services to sue a franchisor on behalf of
   99         certain persons for specified violations; creating s.
  100         686.112, F.S.; providing that a contract or franchise
  101         agreement is void and unenforceable under certain
  102         circumstances; creating s. 686.113, F.S.; providing
  103         notice requirements for the termination, renewal, or
  104         expiration of a franchise; creating s. 686.114, F.S.;
  105         providing that provisions in a franchise agreement
  106         which restrict venue or choice of law are void under
  107         certain circumstances; creating s. 686.115, F.S.;
  108         providing that the rights of a franchisor and
  109         franchisee to agree to binding arbitration are not
  110         limited under certain circumstances; creating s.
  111         686.116, F.S.; providing remedies for a franchisee or
  112         an aggrieved or injured person under certain
  113         circumstances; authorizing punitive damages under
  114         certain circumstances; authorizing the Department of
  115         Legal Affairs or the state attorney to bring an action
  116         for injunctive relief or other civil relief under
  117         certain circumstances; clarifying that specified
  118         remedies are in addition to existing remedies;
  119         creating s. 686.117, F.S.; providing applicability;
  120         amending s. 817.416, F.S.; providing applicability;
  121         providing a directive to the Division of Law Revision
  122         and Information; providing an effective date.
  124  Be It Enacted by the Legislature of the State of Florida:
  126         Section 1. Section 686.101, Florida Statutes, is created to
  127  read:
  128         686.101 Short title.—Sections 686.101-686.117 may be cited
  129  as the “Protect Florida Small Business Act.”
  130         Section 2. Section 686.102, Florida Statutes, is created to
  131  read:
  132         686.102 Legislative findings and intent; construction of
  133  the act.—
  134         (1) The Legislature finds that the welfare of franchisees,
  135  including the success and failure of their franchise businesses,
  136  greatly affects the general economy of this state, the public
  137  interest, and the public welfare. The intent of the Legislature
  138  is to promote fair business relations between franchisees and
  139  franchisors and to protect franchisees against unfair treatment
  140  by franchisors. Therefore, it is necessary to regulate the
  141  conduct of franchisors and their representatives in order to
  142  prevent fraud, unfair business practices, unfair methods of
  143  competition, impositions, and other abuses upon franchisees in
  144  this state.
  145         (2) In order to promote the intention and policies
  146  announced in this section, the provisions of this act shall be
  147  liberally construed.
  148         Section 3. Section 686.103, Florida Statutes, is created to
  149  read:
  150         686.103 Definitions.—As used in this act, the term:
  151         (1) “Affiliate” means a person controlling, controlled by,
  152  or under common control with another person or, in the case of a
  153  business entity, such entity’s officer, director, or other
  154  person in control of the activities of such entity.
  155         (2) “Area franchise” means a contract or agreement,
  156  expressed or implied, written or oral, regardless of whether the
  157  contract or agreement is designated as a franchise, permit,
  158  license, resolution, contract, certificate, agreement, or
  159  otherwise, between a franchisor and another person through which
  160  that person is granted the right, for consideration in whole or
  161  in part for such right:
  162         (a) To sell or negotiate the sale of a franchise in the
  163  name or on behalf of the franchisor; or
  164         (b) To become an area developer and develop a franchise for
  165  the benefit of that person or that person’s affiliates.
  166         (3) “Area franchisee” means the owner of an area franchise.
  167         (4)(a) “Franchise” or “franchise agreement” means a
  168  contract or agreement, expressed or implied, written or oral,
  169  regardless of whether the contract or agreement is designated as
  170  a franchise, permit, license, resolution, contract, certificate,
  171  agreement, or otherwise, for a definite or indefinite time,
  172  between two or more persons by which:
  173         1. A franchisee is granted the right to engage in the
  174  business of offering, selling, or distributing goods or services
  175  under a marketing plan or system prescribed in substantial part
  176  by a franchisor;
  177         2. The operation of the franchise business pursuant to that
  178  marketing plan or system is substantially associated with the
  179  franchisor’s trademark, service mark, trade name, logotype,
  180  advertising, or other commercial symbol designating the
  181  franchisor or its affiliate; and
  182         3. The franchisee is required to pay, directly or
  183  indirectly, a franchise fee.
  184         (b) The term “franchise” or “franchise agreement” includes
  185  an area franchise.
  186         (c) The term “franchise” or “franchise agreement” does not
  187  include any of the following:
  188         1. A franchise governed by the Agricultural Equipment
  189  Manufacturers and Dealers Act.
  190         2. Any activity governed by ss. 686.501-686.506.
  191         3. A franchise governed by the Outdoor Power Equipment
  192  Manufacturers, Distributors, Wholesalers, and Servicing Dealers
  193  Act.
  194         4. A motor vehicle franchise or agreement governed by ss.
  195  320.60-320.70.
  196         5. A business relation between a beer distributor and a
  197  manufacturer governed by s. 563.022.
  198         6. A professional sports franchise as described in s.
  199  288.11625(2)(c).
  200         (5) “Franchise business” means a business unit that is
  201  owned or operated by a franchisee and that is subject to a
  202  marketing plan or system prescribed by the franchise.
  203         (6) “Franchise fee” means a fee or charge greater than $100
  204  annually which a franchisee is required to pay or agrees to pay,
  205  directly or indirectly, to the franchisor for the right to enter
  206  into or continue a franchise, including, but not limited to, a
  207  payment for goods or services. However, any one of the following
  208  is not considered a franchise fee:
  209         (a) A fee or charge that a franchisee pays or agrees to pay
  210  the franchisor for goods at a bona fide wholesale price if no
  211  obligation is imposed upon the franchisee to purchase or pay for
  212  a quantity of goods in excess of that which a reasonable person
  213  normally would purchase by way of a starting inventory or supply
  214  or to maintain an ongoing inventory or supply.
  215         (b) A payment of a reasonable service charge to the issuer
  216  of a credit card by an establishment accepting or honoring the
  217  credit card.
  218         (c) A payment to a trading stamp company by a person who
  219  issues trading stamps in connection with the retail sale of
  220  goods or services.
  221         (d) A payment, not exceeding a sum of $1,000 annually, for
  222  the purchase or rental of fixtures, goods, or other tangible
  223  property necessary for the operation of the franchise business,
  224  if the purchase or rental price does not exceed the cost of
  225  acquiring the fixtures, goods, or other tangible property in the
  226  open market.
  227         (7) “Franchisee” means a person to whom a franchise is
  228  offered or granted.
  229         (8) “Franchisor” means a person who grants a franchise to a
  230  franchisee.
  231         (9) “Fraud” means and includes actual fraud or constructive
  232  fraud as normally defined, in addition to the following:
  233         (a) A misrepresentation in any manner, whether
  234  intentionally false or arising from negligence, of a material
  235  fact.
  236         (b) A promise or representation not made honestly and in
  237  good faith.
  238         (c) An intentional failure to disclose a material fact.
  239         (d) Any artifice employed to deceive another.
  240         (10) “Goods” means any article or thing without limitation,
  241  or any part of such article or thing, including any article or
  242  thing used or consumed by a franchisee in rendering a service
  243  established, organized, directed, or approved by a franchisor.
  244         (11) “Person” means a natural person, corporation, limited
  245  liability company, association, partnership, trust, or other
  246  business entity and, in the case of a business entity, includes
  247  any other affiliate of such entity.
  248         (12) “Sale” means and includes the issuance, transfer,
  249  agreement for transfer, exchange, pledge, hypothecation, or
  250  mortgage in any manner or form, whether by transfer in trust or
  251  otherwise, of any goods or interest therein, or of any franchise
  252  related thereto, for a consideration, and any option,
  253  subscription or other contract, or solicitation, looking to a
  254  sale, or offer or attempt to sell in any form, whether in
  255  written or oral form, for a consideration.
  256         Section 4. Section 686.104, Florida Statutes, is created to
  257  read:
  258         686.104Termination.—
  259         (1) Except as otherwise provided in this act, a franchisor
  260  may not terminate a franchise except for good cause. The
  261  termination of a franchise without good cause constitutes an
  262  unfair termination, regardless of the specified time period of
  263  the franchise. Except as provided in subsection (2), good cause
  264  is limited to the failure of the franchisee to substantially
  265  comply with the reasonable and material requirements imposed
  266  upon the franchisee by the franchise agreement after being given
  267  notice at least 90 days in advance of the termination and a
  268  reasonable opportunity, which may not be less than 60 days after
  269  the date of the notice of noncompliance, to cure the failure. If
  270  the franchisee cures the failure within the time given to cure,
  271  the termination notice is void.
  272         (2) A franchisor may give to a franchisee an immediate
  273  notice of termination without an opportunity to cure if, during
  274  the period in which the franchise is in effect, any one of the
  275  following events, relevant to the franchise, occurs:
  276         (a) The franchisee has been the subject of an order for
  277  relief in bankruptcy, has been judicially determined to be
  278  insolvent, has had all or a substantial part of its assets
  279  assigned to or for the benefit of any creditor, or has admitted
  280  its inability to pay its debts as they come due.
  281         (b) The franchisee abandons, by failing to operate, the
  282  franchise business for 10 consecutive days during which, under
  283  the terms of the franchise, the franchisee is required to
  284  operate the franchise business, or for any shorter period after
  285  which it is not unreasonable under the facts and circumstances
  286  for the franchisor to conclude that the franchisee does not
  287  intend to continue to operate the franchise business, unless
  288  such failure to operate is due to an act of God; a work
  289  stoppage; a strike or labor difficulty; a fire, flood,
  290  hurricane, or sinkhole; or other causes beyond the franchisee’s
  291  control.
  292         (c) The franchisor and franchisee agree in writing to
  293  terminate the franchise.
  294         (d)The franchisee fails, for a period of 10 days after a
  295  notice of noncompliance, to comply with any federal, state, or
  296  local law or regulation, including, but not limited to, any
  297  health, safety, building, and labor law or regulation applicable
  298  to the operation of the franchise.
  299         (e)A final judgment against the franchisee remains
  300  unsatisfied for 30 days, and the franchise business or franchise
  301  business premises are seized, taken over, or foreclosed by a
  302  government official exercising his or her duties, or seized,
  303  taken over, or foreclosed by a creditor, lienholder, or lessor,
  304  unless a supersedeas or other appeal bond has been filed.
  305         (f) A levy of execution has been made on the license
  306  granted by the franchise or on a property used in the franchise
  307  business and is not discharged within 5 days after such levy.
  308         (g)The franchisee is convicted of a felony or any other
  309  criminal misconduct that significantly, directly, and adversely
  310  affects the operation of the franchise business.
  311         (h)The franchisor makes a reasonable determination that
  312  continued operation of the franchise business by the franchisee
  313  will result in imminent and substantial danger to public health
  314  or safety.
  315         Section 5. Section 686.105, Florida Statutes, is created to
  316  read:
  317         686.105Nonrenewal.—
  318         (1) A franchise agreement is deemed to be continuing unless
  319  the franchisor has complied with subsection (2).
  320         (2) A franchisor may not refuse to renew a franchise unless
  321  all of the following criteria have been met:
  322         (a)The franchisor provides written notice to the
  323  franchisee of the franchisor’s intent not to renew at least 180
  324  days before the expiration date or before an extension of the
  325  franchise agreement.
  326         (b)Any of the following circumstances exist:
  327         1.Termination of the franchise agreement is authorized
  328  under s. 686.104.
  329         2.The franchisor and franchisee agree in writing not to
  330  renew the franchise.
  331         3.The franchisor completely withdraws from directly or
  332  indirectly distributing its products or services in the
  333  geographic market served by the franchisee.
  334         (c)The franchisor agrees not to enforce against the
  335  franchisee, upon nonrenewal of the franchise, any covenant not
  336  to compete with the franchisor or with other franchisees of the
  337  franchisor.
  338         (d)The nonrenewal of the franchise is not for the purpose
  339  of converting the franchise business to operation by an employee
  340  or agent of the franchisor for the franchisor’s own account.
  341         (e)If the franchisor determines to sell, transfer, or
  342  assign its interest in the marketing premises occupied by a
  343  franchisee whose franchise agreement is not renewed, either:
  344         1.The franchisor, during the 180-day period after giving
  345  notice to the franchisee of its determination to sell, transfer,
  346  or assign its interest, provides the franchisee a right of first
  347  refusal of at least 30 days’ duration of a bona fide offer made
  348  by another to purchase the franchisor’s interest in the
  349  premises; or
  350         2.The franchisor or the purchaser, transferee, or assignee
  351  of the franchisor’s interest in good faith offers the franchisee
  352  a franchise on substantially the same terms and conditions being
  353  offered by such purchaser, transferee, or assignee to other
  354  franchisees at the time the franchisor determines to sell,
  355  transfer, or assign its interests.
  356         (3) As a condition of renewal, a franchise agreement may
  357  require that the franchisee meet the reasonable qualifications
  358  for new franchisees existing at the time of renewal and that the
  359  franchisee execute a new franchise agreement incorporating terms
  360  and fees existing for new franchises at the time of renewal.
  361         (4)A franchisee who receives a notice of intent not to
  362  renew a franchise agreement may file an action or request
  363  arbitration within the 180-day notice period to seek a
  364  determination of whether the nonrenewal is proper under ss.
  365  686.104-686.106. The franchise agreement and all other related
  366  agreements between the franchisor and the franchisee must
  367  continue in effect until a preliminary determination of the
  368  issues raised in the action or arbitration is made by the court
  369  or arbitrator.
  370         Section 6. Section 686.106, Florida Statutes, is created to
  371  read:
  372         686.106 Sales, transfers, and assignments.—
  373         (1) A franchisor may not deny the surviving spouse, heir,
  374  or estate of a deceased franchisee or of the person controlling
  375  a majority interest in the franchisee the opportunity to
  376  participate in the ownership of the franchise or franchise
  377  business under a valid franchise agreement for at least 180 days
  378  after the death of the franchisee or person controlling a
  379  majority interest in the franchisee. During that time, the
  380  surviving spouse, heir, or estate of the deceased must either
  381  meet all of the existing reasonable qualifications for a
  382  purchaser of a franchise or must sell, transfer, or assign the
  383  franchise to a person who meets the franchisor’s existing
  384  reasonable qualifications for new franchisees. The rights
  385  granted to the surviving spouse, heir, or estate under this
  386  section are granted subject to the surviving spouse, heir, or
  387  estate of the deceased maintaining all standards and obligations
  388  of the franchise.
  389         (2)(a) A franchisee may sell, transfer, or assign a
  390  franchise, all or substantially all of the assets of the
  391  franchise business, or an interest in the franchisee with the
  392  prior written consent of the franchisor. The franchisor’s
  393  consent may not be withheld unless the purchaser, transferee, or
  394  assignee does not meet the qualifications for new or renewing
  395  franchisees described in paragraph (b) or the franchisee and the
  396  purchaser, transferee, or assignee fail to comply with other
  397  reasonable transfer conditions specified in the franchise
  398  agreement.
  399         (b)A franchisor may not prevent a franchisee from selling,
  400  transferring, or assigning a franchise, all or substantially all
  401  of the assets of the franchise business, or an interest in the
  402  franchisee to another person if the other person meets the
  403  franchisor’s reasonable qualifications for the approval of new
  404  or renewing franchises in effect at the time the franchisor
  405  receives notice of the proposed sale, transfer, or assignment.
  406  The franchisor shall make this list of qualifications available
  407  to the franchisee, as provided in subsection (3), and the
  408  franchisor shall consistently apply such qualifications to
  409  similarly situated franchisees operating within the franchise
  410  brand.
  411         (3)(a)To invoke the protections under this section, a
  412  franchisee must, before the sale, transfer, or assignment of a
  413  franchise, all or substantially all of the assets of the
  414  franchise business, or an interest in the franchisee, notify the
  415  franchisor of the franchisee’s intent to sell, transfer, or
  416  assign. The notice must be in writing; must be delivered to the
  417  franchisor by certified or registered mail, return receipt
  418  requested, or by business courier; and must include all of the
  419  following:
  420         1. The name and address of the proposed purchaser,
  421  transferee, or assignee.
  422         2. A copy of all agreements related to the sale, transfer,
  423  or assignment of the franchise, the assets of the franchise
  424  business, or the interest in the franchisee.
  425         3. The proposed purchaser’s, transferee’s, or assignee’s
  426  application for approval to become the successor franchisee.
  427         (b)The proposed purchaser’s, transferee’s, or assignee’s
  428  application must include all forms, financial disclosures, and
  429  related information generally used by the franchisor in
  430  reviewing prospective new franchisees, if those forms are
  431  readily made available to the existing franchisee. If the forms
  432  are not readily available, the franchisee shall request, and the
  433  franchisor shall deliver, the forms to the franchisee by
  434  certified or registered mail, return receipt requested, or by
  435  business courier, within 15 calendar days after the franchisee’s
  436  request. As soon as practicable after receipt of the proposed
  437  purchaser’s, transferee’s, or assignee’s application, the
  438  franchisor shall notify the franchisee and the proposed
  439  purchaser, transferee, or assignee in writing of any additional
  440  information or documentation necessary to complete the sale,
  441  transfer, or assignment application. If the franchisor’s list of
  442  qualifications for the approval of new or renewing franchisees
  443  in effect at the time the franchisor receives notice of the
  444  proposed sale, transfer, or assignment is not readily available
  445  to the franchisee when the franchisee notifies the franchisor of
  446  the franchisee’s intent to sell, transfer, or assign the
  447  franchise, all or substantially all of the assets of the
  448  franchise business, or an interest in the franchisee, the
  449  franchisor must communicate the list of qualifications to the
  450  franchisee within 15 calendar days after receipt of the proposed
  451  purchaser’s, transferee’s, or assignee’s application.
  452         (c)1.The franchisor shall, within 60 days after receipt of
  453  all of the necessary information and documentation required
  454  under paragraph (a), or as specified by written agreement
  455  between the franchisor and the franchisee, notify the franchisee
  456  of the approval or disapproval of the proposed sale, transfer,
  457  or assignment. The notice must be in writing and be delivered to
  458  the franchisee by certified or registered mail, return receipt
  459  requested, or by business courier. If the proposed sale,
  460  transfer, or assignment is disapproved, the franchisor must
  461  include in the notice of disapproval a statement specifying the
  462  reasons for the disapproval. A proposed sale, transfer, or
  463  assignment is deemed approved unless disapproved by the
  464  franchisor in the manner provided in this subparagraph.
  465         2.In a claim against the franchisor for disapproval of a
  466  sale, transfer, or assignment, the reasonableness of the
  467  franchisor’s decision is a question of fact requiring
  468  consideration of all existing circumstances. This paragraph does
  469  not prohibit summary judgment when the reasonableness of the
  470  disapproval of a sale, transfer, or assignment can be decided as
  471  a matter of law.
  472         (4) This section does not prohibit a franchisor from
  473  exercising the contractual right of first refusal to purchase a
  474  franchise, all or substantially all of the assets of a franchise
  475  business, or an interest in a franchisee after receipt of a bona
  476  fide offer from a proposed seller to purchase the franchise,
  477  assets, or interest. A franchisor exercising the contractual
  478  right of first refusal shall offer the seller payment at least
  479  equal to the value offered in the bona fide offer.
  480         Section 7. Section 686.107, Florida Statutes, is created to
  481  read:
  482         686.107 Repurchase of inventory upon termination,
  483  nonrenewal, or expiration of a franchise agreement.—
  484         (1)(a) A franchisee must have the opportunity to monetize
  485  any equity that the franchisee may have developed in the
  486  franchise business before the termination of the franchise
  487  agreement without transferring the equity in the franchisor’s
  488  intellectual property to the franchisee. Therefore, upon
  489  termination, nonrenewal, or expiration of a franchise agreement,
  490  a franchisor shall repurchase at fair market value inventory,
  491  supplies, goods, fixtures, equipment, and furnishings of the
  492  franchise business. The franchisor shall also purchase the
  493  goodwill of the franchise business.
  494         (b)This section does not require the franchisor to
  495  purchase any personalized items, inventory, supplies, goods,
  496  fixtures, equipment, or furnishings that are not reasonably
  497  required to conduct the operation of the franchise business in
  498  accordance with the franchise agreement or any ancillary or
  499  collateral agreement or whose title and possession are not, or
  500  cannot be, lawfully granted by the franchisee to the franchisor
  501  upon the franchisor’s payment to the franchisee for the
  502  inventory, supplies, goods, fixtures, equipment, or furnishings
  503  at the time the franchisee ceases to operate the franchise
  504  business.
  505         (c) Upon the termination, nonrenewal, or expiration of a
  506  franchise, a franchisor may offset money owed to the franchisee
  507  under this section with any amount owed by the franchisee to the
  508  franchisor.
  509         (d)This section does not apply if the franchisee declines
  510  a bona fide offer of renewal from the franchisor which is
  511  consistent with s. 686.105 and the franchise agreement between
  512  the franchisor and franchisee.
  513         (e)This section does not apply if the franchisor does not
  514  prevent the franchisee from retaining control and continuing to
  515  operate the franchise business.
  516         (f)This section does not apply if the franchisor and
  517  franchisee agree in writing to terminate or not renew the
  518  franchise or to allow the franchise to expire.
  519         (g)This section does not apply to inventory, supplies,
  520  goods, fixtures, equipment, or furnishings sold by the
  521  franchisee between the date of the notice of termination,
  522  nonrenewal, or expiration and the date the franchisee ceases to
  523  operate the franchise business pursuant to a termination,
  524  nonrenewal, or expiration.
  525         (2) If a franchisor fails or refuses to repurchase any
  526  inventory, supplies, goods, fixtures, equipment, good will, or
  527  furnishings required to be repurchased under subsection (1)
  528  within 60 days after the termination, nonrenewal, or expiration
  529  of a franchise, the franchisor is civilly liable for the entire
  530  value of the inventory, supplies, goods, fixtures, equipment,
  531  good will, and furnishings required to be repurchased under
  532  subsection (1), plus the franchisee’s reasonable attorney fees,
  533  court costs, and interest on the inventory, supplies, goods,
  534  fixtures, equipment, good will, and furnishings computed at the
  535  legal interest rate provided in s. 687.01 from the 61st day
  536  after termination.
  537         Section 8. Section 686.108, Florida Statutes, is created to
  538  read:
  539         686.108Repurchase of inventory upon death or incapacity of
  540  a franchisee.—
  541         (1) In the event of the death or incapacity of a franchisee
  542  or person controlling a majority interest in the franchisee, the
  543  franchisor must, at the option of the heir at law, if the
  544  franchisee died intestate, the devisee under the terms of the
  545  deceased franchisee’s last will and testament, if the franchisee
  546  died testate, or the person holding a power of attorney or a
  547  guardian in the event of incapacity, repurchase the inventory,
  548  supplies, goods, fixtures, equipment, good will, and furnishings
  549  under s. 686.107. The repurchase provisions of s. 686.107 are
  550  made expressly applicable to the repurchase under this section.
  551  The heir, devisee, transferee, person holding a power of
  552  attorney, or guardian has 1 year after the date of the death or
  553  incapacity, as applicable, of the franchisee or person
  554  controlling a majority interest to exercise his or her option to
  555  sell the inventory, supplies, goods, fixtures, equipment, good
  556  will, and furnishings of the franchise business. However, this
  557  section does not require the repurchase of inventory, supplies,
  558  goods, fixtures, equipment, good will, and furnishings in the
  559  event of death if the heir, devisee, or transferee and the
  560  franchisor enter into a new franchise agreement to operate the
  561  franchise business.
  562         (2)This section is subject to the portion of the franchise
  563  agreement pertaining to death or incapacity of a franchisee or
  564  person controlling a majority interest to the extent that the
  565  franchise agreement is not inconsistent with this section.
  566         Section 9. Section 686.109, Florida Statutes, is created to
  567  read:
  568         686.109Indemnification of franchisee.—A franchisor shall
  569  fully indemnify and hold harmless its franchisee against any
  570  loss, including, but not limited to, court costs and reasonable
  571  attorney fees or damages arising out of a complaint, claim, or
  572  lawsuit involving, but not limited to, strict liability,
  573  negligence, misrepresentation, express or implied breach of
  574  warranty, or rescission of a sale if the complaint, claim, or
  575  lawsuit relates to a part or an accessory; to the manufacture,
  576  assembly, or design of goods or services covered under this act;
  577  or to other functions of the franchisor which are beyond the
  578  control of the franchisee.
  579         Section 10. Section 686.111, Florida Statutes, is created
  580  to read:
  581         686.111 Rights and prohibitions.—The following rights and
  582  prohibitions govern the relations between a franchisor or
  583  subfranchisor and its franchisee:
  584         (1) The parties shall deal with each other in good faith.
  585         (2)A franchisor or subfranchisor may not engage in any
  586  action that is arbitrary, capricious, in bad faith, or
  587  unconscionable and, in terms of law or equity, causes damage to
  588  a franchisee or to the public.
  589         (3)A person may not, during the selling or establishing of
  590  a franchise, intentionally misrepresent or fail to disclose:
  591         (a)The prospects or chances for success of the proposed or
  592  existing franchise;
  593         (b)The known required total investment for such franchise;
  594  or
  595         (c) Any effort to sell or establish more franchises than is
  596  reasonable to expect the market or market area for the
  597  particular franchise to sustain.
  598         (4) It is prohibited and deemed an unfair and deceptive act
  599  or practice, or an unfair method of competition, and a violation
  600  of this section for a franchisor or subfranchisor, or an
  601  officer, agent, employee, or other representative thereof, to
  602  directly or indirectly:
  603         (a) Coerce, compel, or attempt to coerce or compel a
  604  franchisee to enter into an agreement, written or oral,
  605  supplementary to an existing franchise with the franchisor, or
  606  the officer, agent, or other representative thereof; or commit
  607  any other act prejudicial to the franchisee by threatening to
  608  cancel the franchise or any contractual agreement existing
  609  between the franchisor and the franchisee. However, notice in
  610  good faith to the franchisee of the franchisee’s violation or
  611  breach of a term or provision of the franchise or contractual
  612  agreement does not constitute a violation of this section if
  613  such notice is in writing, is mailed by registered or certified
  614  mail to the franchisee at its current business address, and
  615  contains the specific facts as to the franchisee’s violation or
  616  breach of the franchise or contractual agreement;
  617         (b) Terminate or fail to renew a franchise agreement in
  618  violation of this act;
  619         (c) Allow a franchise agreement to expire without complying
  620  with this act;
  621         (d) Fail to repurchase inventory, supplies, goods,
  622  fixtures, equipment, good will, and furnishings in violation of
  623  s. 686.107 or s. 686.108;
  624         (e) Prevent a sale, transfer, or assignment of a franchise
  625  in violation of s. 686.106;
  626         (f) Violate the Florida Deceptive and Unfair Trade
  627  Practices Act in connection with its business as a franchisor,
  628  or an officer, agent, or other representative thereof;
  629         (g) Resort to or use false or misleading advertisement in
  630  connection with its business as a franchisor, or an officer,
  631  agent, or other representative thereof;
  632         (h) Willfully discriminate, directly or indirectly, in
  633  price, programs, or terms of sale offered to a franchisee or
  634  give to a franchisee an economic, business, or competitive
  635  advantage not offered to another franchisee of the same or
  636  similar franchise;
  637         (i) Impose, directly or indirectly, an unreasonable
  638  restriction on a franchisee relative to transfer, renewal,
  639  termination, location, or site control;
  640         (j) Without prior written disclosure to a franchisee,
  641  obtain money, goods, services, anything of value, or any other
  642  benefit from another person with whom the franchisee does
  643  business or employs on account of or in relation to the
  644  transactions between the franchisee, the franchisor, and the
  645  other person;
  646         (k) Require a franchisee to assent to a release,
  647  assignment, novation, waiver, or estoppel that would relieve any
  648  person from liability imposed under this act, including, but not
  649  limited to, through the use of a disclaimer or checklist
  650  designed to avoid a protection under this act;
  651         (l) Require a franchisee to assent to the use of a choice
  652  of law provision by selecting a different state’s law to govern
  653  the relationship of the parties;
  654         (m) Restrict or inhibit, directly or indirectly, the right
  655  of a franchisee to join a trade association or the free
  656  association for any lawful purpose among franchisees;
  657         (n) Compete with a franchisee within the franchisee’s
  658  exclusive territory or grant a franchise to another person for a
  659  franchise business to be located within the exclusive territory;
  660         (o) Impose upon a franchisee, by contract or rule, written
  661  or oral, any unreasonable standard of conduct; or
  662         (p) Require a franchisee to waive its rights to a jury
  663  trial or waive any procedure or remedy otherwise available in
  664  this state, however, a binding arbitration clause is enforceable
  665  if it complies with s. 686.115.
  666         (5) A person who executes or carries out a scheme, plan, or
  667  organization that violates any provision of this section, if
  668  knowledge or intent is proved, commits a misdemeanor of the
  669  second degree, punishable as provided in ss. 775.082 and
  670  775.083.
  671         (6) A person who shows in a civil court of law a violation
  672  of this section shall receive a judgment for all money invested
  673  in the franchise and all of the franchise business’s losses and
  674  other damages incurred while running the franchise business.
  675  Upon such a showing, the court shall award reasonable attorney
  676  fees to any person holding an interest in a franchise or who has
  677  been injured by a violation of this act, and who is bringing the
  678  action against the person who violates this section and
  679  reasonable costs incurred in bringing such action.
  680         (7) The Department of Legal Affairs, by itself or jointly
  681  with the Department of Agriculture and Consumer Services, may
  682  sue on behalf of the people of this state for injunctive relief
  683  against any franchisor plan or activity that is in violation of
  684  this act.
  685         Section 11. Section 686.112, Florida Statutes, is created
  686  to read:
  687         686.112Unenforceable franchise agreement or other
  688  contract.—A franchise agreement or other contract, a part
  689  thereof or practice thereunder, which is in violation of any
  690  provision of this act is deemed against public policy and is
  691  void and unenforceable.
  692         Section 12. Section 686.113, Florida Statutes, is created
  693  to read:
  694         686.113Notice requirements.—A notice of termination,
  695  nonrenewal, or expiration required under ss. 686.104-686.106
  696  must:
  697         (1) Be in writing;
  698         (2) Be posted by registered or certified mail, return
  699  receipt requested, or be personally delivered to the franchisee;
  700  and
  701         (3)Contain a statement of intent to terminate, not renew,
  702  or allow the franchise to expire; the reasons for the
  703  termination, nonrenewal, or expiration; and the effective date
  704  of the termination, nonrenewal, or expiration.
  705         Section 13. Section 686.114, Florida Statutes, is created
  706  to read:
  707         686.114Venue; choice of law.—A provision in a franchise
  708  agreement restricting the venue to a forum outside of this state
  709  or selecting the law of any other state or jurisdiction other
  710  than Florida is void with respect to any claim arising under or
  711  relating to a franchise agreement involving a franchisee that
  712  was, at the time of signing, a resident of this state or a
  713  business entity established in this state or involving a
  714  franchise business either operating or planning to be operated
  715  in this state.
  716         Section 14. Section 686.115, Florida Statutes, is created
  717  to read:
  718         686.115Arbitration.—This act does not limit the right of a
  719  franchisor and franchisee to agree, before or after a dispute
  720  arises, to binding arbitration to settle a claim under this act
  721  if:
  722         (1) The standards applied and the remedies available in the
  723  arbitration are not less than the requirements specified in this
  724  act; and
  725         (2) Each arbitrator employed is chosen from a list of
  726  impartial arbitrators provided by the American Arbitration
  727  Association or is any other impartial person.
  728         Section 15. Section 686.116, Florida Statutes, is created
  729  to read:
  730         686.116Remedies.—
  731         (1) If a franchisor terminates, fails to renew, or allows a
  732  franchise to expire in violation of this act, the franchisee is
  733  entitled to receive from the franchisor the fair market value of
  734  the franchise business and franchise assets in addition to any
  735  other damage caused by the violation.
  736         (2) In addition to any relief specified in this act, any
  737  person aggrieved or injured in his or her business or property
  738  by a violation of this act may bring an action in the
  739  appropriate state or federal court of this state and shall
  740  recover the damages sustained and the costs of such action,
  741  including reasonable attorney fees.
  742         (3) Without regard and in addition to any other remedy or
  743  relief to which a person is entitled, any person aggrieved by a
  744  violation of this act may bring an action to obtain a
  745  declaratory judgment stating that an action or a practice
  746  violates these sections and may obtain injunctive relief
  747  enjoining a franchisor that has violated, is violating, or is
  748  otherwise likely to violate these sections from committing the
  749  violation.
  750         (4) In an action for money damages, if a judge or jury
  751  finds that the franchisor has acted maliciously, the judge or
  752  jury may award punitive damages as authorized by state law.
  753         (5) The Department of Legal Affairs or the state attorney
  754  may bring an action for injunctive relief or other appropriate
  755  civil relief for a violation of this act if the violation occurs
  756  in the judicial circuit of the department or the state attorney,
  757  respectively.
  758         (6)The remedies provided in this section are in addition
  759  to any other remedies provided by law or in equity, including,
  760  but not limited to, the Florida Deceptive and Unfair Trade
  761  Practices Act.
  762         Section 16. Section 686.117, Florida Statutes, is created
  763  to read:
  764         686.117Applicability.—
  765         (1) Any person or franchisor who engages directly or
  766  indirectly in an agreement or contract within this state in
  767  connection with a franchise; or any franchise whose franchisee
  768  is a resident of this state or is domiciled in this state or
  769  whose franchise business is, has been, or is intended to be
  770  operated in this state, is subject to this act and to the
  771  jurisdiction of the courts of this state, in accordance with the
  772  laws of this state, for violations of this act.
  773         (2) This act applies to:
  774         (a) Any written or oral agreement between a franchisor and
  775  a franchisee, including, but not limited to, a franchise
  776  offering; a franchise agreement; a sale of goods, services, and
  777  advertising; a lease or mortgage of real or personal property; a
  778  promise to pay; a security interest; a pledge; an insurance
  779  contract; an advertising contract; a construction or
  780  installation contract; a servicing contract; and any other
  781  agreement in which the franchisor has a direct or indirect
  782  interest;
  783         (b) Any franchise entered into, renewed, amended, or
  784  revised after the effective date of this act;
  785         (c) Any existing franchise of an indefinite duration which
  786  may be terminated by the franchisee or franchisor without cause;
  787  and
  788         (d) Any existing franchise entered into before the
  789  effective date of this act, only to the extent that this act
  790  does not significantly impair the existing contract rights
  791  between the parties.
  792         (3) This act is supplemental to, and does not preempt,
  793  local ordinances dealing with prohibited or unlawful conduct in
  794  the manufacturing, distribution, wholesaling, advertising, or
  795  sale of goods if such ordinances are not inconsistent with this
  796  act.
  797         (4) This act supersedes s. 817.416 with respect to any
  798  franchisee that signs a franchise agreement on or after the
  799  effective date of this act. Section 817.416 continues to govern
  800  the claims of all franchisees that signed franchise agreements
  801  or were victims of fraud perpetrated before the effective date
  802  of this act, as well as distributors and any other entities,
  803  past, present, or future, which would be covered by s. 817.416,
  804  but not by this act.
  805         Section 17. Subsection (5) is added to section 817.416,
  806  Florida Statutes, to read:
  807         817.416 Franchises and distributorships;
  808  misrepresentations.—
  809         (5) APPLICABILITY.—This section does not apply to a
  810  franchise entered into, renewed, amended, or revised on or after
  811  the effective date of this act. A franchise entered into,
  812  renewed, amended, or revised on or after the effective date of
  813  this act is subject to ss. 686.101-686.117.
  814         Section 18. The Division of Law Revision and Information is
  815  directed to replace the phrase “the effective date of this act”
  816  wherever it occurs in this act with the date the act becomes a
  817  law.
  818         Section 19. This act shall take effect upon becoming a law.