The widespread sale of franchises is a relatively new form of business which has created numerous problems, both from an investment and a business point of view in the United States. Some members of the Virginia General Assembly have been told that franchisees in the Commonwealth have suffered substantial losses where the franchisor, or his representative, has not provided full and complete information regarding the franchisor-franchisee relationship, the details of the contract between franchisor and franchisee, and the prior business experience of the franchisor. In order to study the need for legislation in this matter, the General Assembly enacted House Joint Resolution No. 79 at its 1970 Session.

HOUSE JOINT RESOLUTION NO. 79

"Directing the Virginia Advisory Legislative Council to make a study and report on retail franchising in Virginia.

Whereas, retail franchising is and has been for an extended period an important segment of business and commercial activity in the Commonwealth; and

Whereas, retail franchising has expanded in recent years at the phenomenal rate of fifteen per centum per year, accounting for ten per centum of the total output of goods and services in the United States, and nearly twenty-eight per centum of all retail sales; and

Whereas, a similar growth in franchising is evident in Virginia, with a considerable effect on the economy and commerce of the Commonwealth and on the general welfare of the citizens thereof; and

Whereas, a study of the franchising industry is necessary to determine what adverse effects, if any, it has had at the State level on free trade and competition, the adverse effects, if any, that such industry has had on existing commercial enterprises within the Commonwealth, and to assess the adequacy of existing Virginia laws to deal with these problems; now, therefore, be it

Resolved by the House of Delegates, the Senate concurring, That the Virginia Advisory Legislative Council is hereby directed to make a study of retail franchising and the franchising industry generally in Virginia, with particular emphasis on any unfair or anticompetitive practices existing in franchising, oppressive franchise creations and cancellations, and the relative rights and obligations as between franchisers and franchisees; and to recommend legislation, if any, which the Council may deem desirable and proper to deal with such problems.

The Council shall conclude its study and make its report to the Governor and the General Assembly by November first, nineteen hundred seventy-one."

Delegate Russell M. Carneal of Williamsburg, a member of the Council, was selected as Chairman of a committee to conduct the initial study. Also selected to serve on this committee were: Delegate C. W. Cleaton of South Hill; Mr. Stephen Hartwell of Fairfax County; Mr. Lewis A. Haskell, Jr. of Arlington; Mr. Tom M. Hook of Alexandria; Delegate Frank E. Mann of Alexandria; Mr. Russell W. Miller of Richmond; Senator Willard J. Moody of Portsmouth; Mr. Paul E. Mullinix of Richmond; Delegate Stanford E. Parris of Fairfax; Mr. J. Linwood Rice of Richmond; Mr. Harold H. Scott of Richmond; Mr. William C. Vaughan of Lynchburg; and Senator Edward E. Willey of Richmond.

Mr. Parris was elected Vice-Chairman of the Committee.

The Virginia Advisory Legislative Council and the Division of Statutory Research and Drafting made staff and facilities available to carry out this study; they assigned the necessary employees to assist the members and the study group at all times.

The Study included numerous meetings in Richmond; conferences with representatives of the Federal Trade Commission, the Senate Subcommittee on Antitrust and Monopoly and franchisee and franchisor organizations; and public hearings in Arlington, Roanoke and Norfolk.