,,ii #aaf? ,,congress #a/ ,session ,s4 #bchc ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,july #ca1 #bjai,ms4 ,cortez ,ma/o introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,small ,bus9ess & ,entrepr5eur%ip ,a ,,bill ,to e/abli% m9imum /&>ds ( disclosure by fran*ises ^: fran*isees use loans gu>ante$ by ! ,small ,bus9ess ,adm9i/ration4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,small ,bus9ess ,adm9i/ration ,fran*ise ,loan ,transp>5cy ,act ( #bjai4 #b4 ,f9d+s2 purpose 7a7 ,f9d+s ,congress f9ds t-- 7#a7 fran*ise bus9esses repres5t a l>ge & gr[+ segm5t ( ! retail & s]vice bus9esses ( ! ,unit$ ,/ates & are rapidly replac+ m traditional =ms ( small bus9ess own]%ip 9 ! economy ( ! ,unit$ ,/ates2 7#b7 ! ,small ,bus9ess ,adm9i/ration gu>antees mu* ( ! f9anc+ available 9 fran*is+2 7#c7 ! ,small ,bus9ess ,adm9i/ration requires pro =ma projections1 includ+ project$ rev5ue1 = ! fir/ ye> ( op]ations ( a fran*ise z "p ( ! /&>d op]at+ requirem5ts = a fran*isee to qualify = f9anc+2 7#d7 on ,july #ac1 #bjaa1 ! ,(fice ( ,inspector ,g5]al ( ! ,small ,bus9ess ,adm9i/ration publi%$ an audit 7,report ,no4 #aa-af7 on loans made "u section #g7;a7 ( ! ,small ,bus9ess ,act 7#ae ,u4,s4,c4 #fcf7;a77 79 ?is section ref]r$ to z #g7;a7 loans7 to ,hunt+ton ,le>n+ ,c5t] fran*ises :]e fir/ ye> rev5ue projections 7 all significantly inflat$2 7#e7 on ,july #b1 #bjac1 ! ,(fice ( ,inspector ,g5]al ( ! ,small ,bus9ess ,adm9i/ration publi%$ an audit evaluation 7,report ,no4 #ac-ag7 %[+ t ! ,adm9i/ration ne$$ to improve ! managem5t ( ! #g7;a7 loan portfolio risk1 specifically ) c]ta9 fran*ise br&s t _h exceptionally high default rates t cont9u$ to receive gu>ante$ loans f ! ,adm9i/ration2 7#f7 9 ,septemb] #bjac1 ! ,gov]nm5t ,acc\ntability ,(fice publi%$ a /udy 7,,gao-#ac-gei7 %[+ t ov] ! #aj-ye> p]iod f #bjjc to #bjab1 #bh p]c5t ( #g7;a7 loans provid$ to fran*ises requir$ a gu>antee paym5t2 7#g7 ! /udy describ$ 9 p>agraph 7#f7 0 bas$ on #cb1cbc loans total+ #aj1fjj1jjj1jjj1 :i* requir$ #a1ejj1jjj1jjj 9 gu>antee paym5ts2 7#h7 ! report = ! /udy describ$ 9 p>agraph 7#f7 /at$1 ,pot5tial fran*isees %\ld include fir/-ye> rev5ue e/imates 9 _! ,,sba loan applications4 ,h[ev]1 ?is in=mation is n necess>ily available to pot5tial fran*isees 9 ! fran*ise organization's disclosure docum5t42 7#i7 fran*ise companies mo/ (t5 collect royalties bas$ on gross rev5ue1 !re=e rev5ue data on ea* fran*ise outlet are readily available2 & 7#aj7 :ile bo? ! fran*isor & ! l5d] pr(it z a result ( f9anc+ f ! ,small ,bus9ess ,adm9i/ration1 ! total liability = ! loan is born by ! fran*isee4 7b7 ,purpose ,! purposes ( ?is ,act are to-- 7#a7 ensure transp>5cy 9 ! loan processes ( ! ,small ,bus9ess ,adm9i/ration s t ! fran*isee borr[]1 ! l5d]1 & ! ,adm9i/ration all h access to in=mation t is key to ! l5d+ process2 7#b7 l[] ! fees & rates *>g$ to fran*isee borr[]s2 & 7#c7 help ensure l[] default rates 9 ord] to make m money available = loans to viable fran*ise br&s4 #c4 ,def9itions ,9 ?is ,act-- 7#a7 ! t]m disclosure docum5t means ! disclosure docum5t requir$ to be furni%$ by a fran*isor to a prospective fran*isee "u section #dcf4b ( title #af1 ,code ( ,f$]al ,regulations1 z 9 effect on ,july #a1 #bjjg2 7#b7 ! t]m ,f9ancial ,p]=mance ,repres5tation ,comm5t>y means ! ,f9ancial ,p]=mance ,repres5tation ,comm5t>y adopt$ by ! ,nor? ,am]ican ,securities ,adm9i/rators ,association on ,may #h1 #bjag2 & 7#c7 ! t]ms fran*ise1 fran*isee1 & fran*isor h ! mean+s giv5 ^? t]ms 9 section #dcf4a ( title #af1 ,code ( ,f$]al ,regulations1 z 9 effect on ,july #a1 #bjjg4 #d4 ,requir$ disclosures 7a7 ,9 g5]al ,subject to subsection 7b71 a fran*isor1 except = a fran*isor ( a fran*ise 9 ! lodg+ indu/ry1 t qualifies = gu>ante$ l5d+ f ! ,small ,bus9ess ,adm9i/ration = ! fran*ises ( ! fran*isor %all1 at a m9imum1 disclose 9 ! disclosure docum5t requir$ to be furni%$ by ! fran*isor to any prospective fran*isee ! foll[+ in=mation = ea* ( ! #c ye>s prec$+ ! date ( ! disclosure docum5t3 7#a7 ,! av]age & m$ian fir/-ye> rev5ues = all bus9esses op]at$ "u fran*ises grant$ by ! fran*isor1 9 accordance ) ! ,f9ancial ,p]=mance ,repres5tation ,comm5t>y4 7#b7 ,! total numb] ( bus9esses op]at$ "u fran*ises grant$ by ! fran*isor t1 dur+ ! fir/ ye> ( op]ation1 ei!r-- 7,a7 ceas$ op]ations2 or 7,b7 7 transf]r$ to a new fran*isee4 7#c7 ,! av]age & m$ian rev5ues = all bus9esses op]at$ "u fran*ises grant$ by ! fran*isor1 9 accordance ) ! ,f9ancial ,p]=mance ,repres5tation ,comm5t>y4 7b7 ,limitation ,a fran*isor may n disclose to a prospective or curr5t fran*isee1 directly or ?r\gh a ?ird p>ty1 any in=mation relat+ to rev5ue t conflicts ) ! in=mation relat+ to rev5ue provid$ "u subsection 7a7 9 a disclosure docum5t unless ! relevant fran*ise pur*ase includes #a or m bus9esses "u ! relevant fran*ise t are 9 exi/5ce on ! date on :i* ! disclosure is made1 9 :i* case ! fran*isor %all disclose to ! prospective or curr5t fran*isee ! relevant in=mation relat+ to rev5ue z ( ! date on :i* ! disclosure is made ) respect to ^? bus9esses4 #e4 ,en=cem5t ,! ,adm9i/rator ( ! ,small ,bus9ess ,adm9i/ration-- 7#a7 %all en=ce ! requirem5ts "u ?is ,act2 & 7#b7 may hold a fran*isor liable = ! balance ( any loan obta9$ ?r\gh a violation ( ?is ,act4 #f4 ,no preemption ,no?+ conta9$ 9 ?is ,act %all prohibit an au?oriz$ ,/ate (ficial f proce$+ 9 ,/ate c\rt on ! basis ( an alleg$ violation ( any civil or crim9al /atute ( t ,/ate4 #g4 ,sev]ability ,if any provision ( ?is ,act or any application ( ?is ,act to any p]son or circum/ances is held invalid1 ! rema9d] ( ?is ,act & its application to any p]son or circum/ance %all n be affect$ !reby4