Business Regulation - Maryland Franchise Registration and Disclosure Law - Alterations (Franchise Reform Act)
Summary
HB992 makes several changes to Maryland’s Franchise Registration and Disclosure Law, which governs the offer and sale of franchises in the state. The bill extends from 3 to 5 years the period during which the Securities Commissioner may take certain enforcement actions after a violation occurs. It also requires the Commissioner to adjust a franchise registration exemption threshold for inflation or deflation using the Consumer Price Index for All Urban Consumers, and it expands the time limit for private civil actions involving franchise sales or grants, replacing a single 3-year filing deadline with a longer and more flexible limitations period tied to the grant of the franchise and the start of operations.
The bill also adds a new protection for franchisees’ associational rights. It prohibits franchisors and related persons from restricting franchisees from joining trade associations or otherwise freely associating for lawful purposes, and it creates a private right of action for injunctive relief, damages, costs, and attorney’s fees. In addition, HB992 directs the Securities Commissioner to create a 6-year pilot program to waive or expedite review of certain franchise registration renewal fees for registrants that file timely renewal materials, and it requires a report to the legislature on the program’s effects before the pilot expires.
Impact
HB992 amends multiple sections of the Business Regulation Article, including provisions on cease-and-desist authority, franchise registration exemptions, civil liability for franchise sales, and franchisee association rights. It changes enforcement timing, updates exemption standards to reflect inflation, expands franchisee remedies and filing deadlines, and establishes a temporary administrative pilot program for renewal fee processing. The bill affects franchisors, subfranchisors, franchisees, and the Office of the Attorney General’s Securities Commissioner, and it takes effect October 1, 2025, with the pilot program ending automatically in 2031 unless extended by future legislation.
Sentiment
The bill appears to have been broadly supported. It received a favorable committee report with amendments and passed the House on third reading with 136 yeas and 0 nays, indicating unanimous support among voting members. The available record does not include committee testimony, but the voting history suggests little overt opposition in the House.
Contention
The main policy issues in HB992 are the balance between franchisee protections and franchisor/regulatory burdens. Supporters likely favor stronger franchisee rights, longer enforcement and lawsuit windows, and fee relief or faster processing for compliant registrants. Potential points of concern include the expanded liability exposure for franchisors, the new associational-rights restrictions, and the administrative burden on the Commissioner to implement inflation indexing and the pilot renewal-fee program. No specific dissenting arguments are recorded in the provided materials, and the final House vote was unanimous.
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