SUMMARY--Revises provisions governing operation of franchises. (BDR 52-1167)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: No.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to franchises; providing that certain provisions in a franchise agreement, or a document that is ancillary to that agreement, are void; prohibiting a franchisor from restricting the rights of a franchisee to associate with certain persons; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Chapter 597 of NRS is hereby amended by adding thereto the provisions set forth as sections 2 to 8, inclusive, of this act.
Sec. 2 As used in sections 2 to 8, inclusive, of this act, unless the context otherwise requires, the words and terms defined in sections 3, 4 and 5 of this act have the meanings ascribed to them in those sections.
Sec. 3 "Franchise" means an arrangement which is evidenced in an oral or written agreement, express or implied, which:
1. Grants the right to a franchisee to distribute goods or provide services under a marketing plan prescribed or suggested in substantial part by a franchisor.
2. Requires the franchisee to pay a franchise fee to the franchisor or his affiliate.
3. Allows the franchise to be substantially associated with a trade-mark, service mark, trade name, logo, advertisement or other commercial symbol or designation of the franchisor or his affiliate.
Sec. 4 "Franchisee" means a person to whom a franchise is granted.
Sec. 5 "Franchisor" means a person who grants a franchise or an affiliate of such a person.
Sec. 6 1. A provision in a franchise agreement, or a document that is ancillary to a franchise agreement, which:
(a) Restricts jurisdiction or venue to a forum other than this state; or
(b) Requires a dispute to be submitted to arbitration outside this state,
is void.
2. A franchisor and franchisee may, at the time a dispute is submitted to arbitration, agree to conduct the arbitration outside this state.
Sec. 7 A franchisor or any officer, agent or employee of a franchisor shall not:
1. Restrict a franchisee from associating with other franchisees or from forming or participating in a trade association; or
2. Retaliate or discriminate against a franchisee for engaging in such activities.
Sec. 8 The provisions of sections 2 to 8, inclusive, of this act do not:
1. Limit any liability that exists pursuant to any other specific statute or at common law; or
2. Apply to any legal action based on facts which occurred before October 1, 1997, or to any franchise agreement entered into, last amended or renewed before October 1, 1997.