Senate Bill 376
By: Senator Robertson of the 29th
A BILL TO BE ENTITLED
AN ACT
To amend Chapter 1 of Title 10 of the Official Code of Georgia Annotated, relating to selling
and other trade practices, so as to enact the "Georgia Restaurant Franchise Relations Act";
to prohibit a franchisor from terminating a franchise except under certain circumstances; to
provide for circumstances which warrant the termination of a franchise; to provide conditions
for arbitration; to provide for the renewal of a franchise; to prohibit a franchisor from
discriminating against franchise operations over franchisor owned operations; to prohibit
forum selection; to provide that a franchisor shall provide an opportunity for the survivor of
a deceased franchisee to operate the franchise; to provide for definitions; to provide for
penalties; to provide for related matters; to provide for an effective date and applicability; to
repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Chapter 1 of Title 10 of the Official Code of Georgia Annotated, relating to selling and other
trade practices, is amended by enacting a new article to read as follows:
<ins>"ARTICLE 37
Part 1
10-1-960.
This chapter shall be known and may be cited as the 'Georgia Restaurant Franchise
Relations Act.'
10-1-961.
As used in this chapter, the term:
(1) 'Area franchise' means any contract or agreement between a franchisor and a
subfranchisor whereby the subfranchisor is granted the right, for consideration given in
whole or in part for such right, to sell or negotiate the sale of franchises in the name or
on behalf of the franchisor.
(2)(A) 'Franchise' means a contract or agreement, either expressed or implied, whether
oral or written, between two or more persons by which:
(i) A franchisee is granted the right to engage in the business of offering, selling, or
distributing food or food services under a marketing plan or system prescribed in
substantial part by a franchisor;
(ii) The operation of the franchisee's business pursuant to that plan or system is
substantially associated with the franchisor's trademark, trade dress, service mark,
trade name, logotype, advertising, or other commercial symbol designating the
franchisor or its affiliate; and
(iii) The franchisee is required to pay, directly or indirectly, a franchise fee.
(B) Such term does not include any of the following:
(i) Lease departments, licenses, or concessions at or with a general merchandise retail
establishment where the lease department, licensee, or concessionaire is incidental
and ancillary to the general commercial operation of the retail establishment. Sales
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<ins>of a lease department, license, or concessionaire are incidental and ancillary to the
general commercial operation of the retail establishment if they amount to less than
10 percent of the establishment's sales; or
(ii) A nonprofit organization operated on a cooperative basis by and for independent
retailers which wholesales goods and services primarily to its member retailers and
in which:
(I) Control and ownership of each member is substantially equal;
(II) Membership is limited to those who will use the services furnished by the
organization;
(III) Transfer of ownership is prohibited or limited;
(IV) Capital investments receive no return;
(V) Substantially equal benefits pass to the members on the basis of patronage of
the organization;
(VI) Members are not personally liable for obligations of the organization in the
absence of a direct undertaking or authorization by them;
(VII) Services of the organization are furnished primarily for the use of the
members;
(VIII) Each member and prospective member is provided with an offering circular;
(IX) No part of the receipts, income, or profit of the organization is paid to any
profit-making entity, except for arm's length payments for necessary goods and
services, and members are not required to purchase goods or services from any
designated profit-making entity; and
(X) The nonprofit organization is subject to an action for rescission or damages if
the organization fraudulently induced the plaintiff to join the organization.
(3) 'Franchisee' means a person to whom a franchise is granted.
(4) 'Franchise fee' means any fee or charge that a franchisee or subfranchisor is required
to pay or agrees to pay for the right to enter into a business under a franchise agreement,
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<ins>including, but not limited to, any such payment for such goods and services; provided,
however, that the following shall not be considered the payment of a franchise fee:
(A) The purchase or agreement to purchase goods at a bona fide wholesale price if no
obligation is imposed upon the purchaser to purchase or pay for a quantity of such
goods in excess of that which a reasonable businessperson normally would purchase by
way of a starting inventory or supply or to maintain an ongoing inventory or supply;
(B) The payment of a reasonable service charge to the issuer of a credit card by an
establishment accepting or honoring such credit card;
(C) The payment, directly or indirectly, of a franchise fee which, on an annual basis,
does not exceed the sum of $100.00; or
(D) The payment of a sum of not exceeding $1,000.00 annually on account of the
purchase price or rental of fixtures, equipment, or other tangible property to be utilized
in, and which is necessary for, the operation of the franchised business, if the price or
rental so charged does not exceed the cost which would be incurred by the franchisee
acquiring the item or items from other persons or in the open market.
(5) 'Franchisor' is a person who grants or has granted a franchise.
(6) 'Person' means an individual, a corporation, a partnership, a limited liability
company, a joint venture, an association, a joint stock company, a trust, or an
unincorporated organization.
Part 2
10-1-965.
Except as otherwise provided by this chapter, no franchisor may terminate a franchise prior
to the expiration of its term, except for good cause. Good cause shall include, but shall not
be limited to, the failure of the franchisee to comply with any lawful requirement of the
franchise agreement after being given at least 90 days' notice to cure the failure. If the
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<ins>franchisor is the sole provider of goods or services under the terms of the franchise
agreement, the franchisor may not suspend the sale of goods or the provision of services
during the period allowed to cure any such failure.
10-1-966.
All notices of termination or nonrenewal required by this chapter shall:
(1) Be in writing;
(2) Be posted by registered, certified, or other receipted mail, delivered by email or by
other electronic means, or personally delivered to the franchisee; and
(3) Contain a statement of intent to terminate or not to renew the franchise, together with
the reasons therefor and the effective date of such termination, nonrenewal, or expiration.
10-1-967.
If, during the period in which the franchise is in effect, there occur any of the following
events which are relevant to the franchise, immediate notice of termination without an
opportunity to cure shall be deemed reasonable:
(1) The franchisee or the business to which the franchise relates is declared bankrupt or
judicially determined to be insolvent, or all or a substantial part of the assets thereof are
assigned to or for the benefit of any creditor, or the franchisee admits his or her inability
to pay his or her debts as they come due;
(2) The franchisor and franchisee agree in writing to terminate the franchise;
(3) The franchisee makes any material misrepresentations relating to the acquisition of
the franchise business or the franchisee engages in conduct which reflects materially and
unfavorably upon the operation and reputation of the franchise business or system;
(4) The franchisee repeatedly fails to comply with one or more requirements of the
franchise, but in no event where the franchisee takes corrective action pursuant to Code
Section 10-1-965 to remedy such failure after proper notice;
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<ins>(5) The franchised business or business premises of the franchise is seized, taken over,
or foreclosed by a government official in the exercise of his or her duties or seized, taken
over, or foreclosed by a creditor, lienholder, or lessor if:
(A) A final judgment against the franchisee remains unsatisfied for 30 days unless a
supersedeas or other appeal bond has been filed; or
(B) A levy of execution has been made upon the license granted by the franchise
agreement or upon any property used in the franchised business, and it is not discharged
within five days of such levy; or
(6) The franchisee is convicted of a felony or any other criminal misconduct which is
relevant to the operation of the franchise.
10-1-968.
Nothing contained in this article shall limit the right of a franchisor and franchisee to agree
before or after a dispute has arisen to binding arbitration of claims under this chapter,
provided that:
(1) The standards applied in such arbitration are not less than the requirements specified
in this chapter; and
(2) The arbitrator or arbitrators employed in such arbitration are chosen from a list of
impartial arbitrators supplied by the American Arbitration Association or other impartial
person.
10-1-969.
If a franchisor consents to a franchisee continuing to operate a franchise for 30 days or
more after the expiration of a franchise agreement, such franchise agreement shall be
deemed to have been renewed for the same term and under the same conditions as the
original agreement. For purposes of this Code section, a failure to take affirmative action
to prevent operation shall be considered a consent to operate.
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<ins>Part 3
10-1-975.
If a franchisor operates facilities in this state, it may not require higher standards with
regard to physical plant, employee attire, product offerings, or pricing or in any other
material way differentiate a franchise facility from a facility owned or operated by the
franchisor.
10-1-976.
Any condition, stipulation, or provision in a franchise agreement requiring the application
of the law of another state or selecting venue in a particular court is void and
unenforceable.
10-1-977.
No franchisor shall deny the surviving spouse, heirs, or estate of a deceased franchisee or
the majority shareholder of the franchisee the opportunity to continue to participate in the
ownership of the franchise under the franchise agreement between the franchisee and
franchisor. No franchisor shall require any training or qualification for any such person for
a period of six months following the death of the franchisee or principal shareholder;
provided, however, that, during such period, the surviving spouse, heirs, or estate of the
deceased shall maintain all lawful standards and obligations of the franchise.
10-1-978.
Any condition, stipulation, or provision purporting to bind any person to waive compliance
with any provision of this chapter is contrary to public policy and therefore void.
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<ins>10-1-979.
The provisions of this article shall apply to any franchise where either the franchisee is
domiciled in this state or the franchised business is or has been operated in this state.
10-1-980.
Any violation of this article by a franchisor shall be an unfair trade practice subject to the
provisions of Part 2 of Article 15 of this chapter, the 'Fair Business Practices Act of 1975.'
In addition, any individual who is harmed as a result of a violation of this article shall have
a cause of action against the person whose violation caused the harm."
</ins> SECTION 2.
This Act shall become effective on July 1, 2025, and shall apply to all franchises entered into
on or after such effective date, and to any renewals, modifications, or extensions of such
franchises entered into on or after such effective date.
SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.