SB 652

84(R) - 2015
Senate Natural Resources & Economic Development
Senate Natural Resources & Economic Development
Economic & Small Business Development

Vote Recommendation

  • Positive
  • Neutral
  • Neutral
  • Positive
  • Neutral


Charles Schwertner

Bill Caption

Relating to excluding a franchisor as an employer of a franchisee or a franchisee's employees.

Fiscal Notes

A fiscal note dated March 9, 2015 anticipates no significant implications to the State or units of local government. It also indicates that based on information provided by the Texas Workforce Commission (TWC), the TWC should be able to implement the provisions of the bill with existing resources.

Bill Analysis

Senate Bill 652 would recognize by law that a franchisor is not the employer of a franchisee, nor the employer of a franchisee's employees.

Vote Recommendation Notes

5/13/15 Update:

The committee substitute introduced by the House Business & Industry committee would add a provision to the bill providing that the sections establishing the clear distinction between a franchisor and a franchisee would not apply to a franchisor who would have been found by a court of competent jurisdiction to have exercised a type or degree of control over the franchisee or the franchisee’s employees not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.

This provision would not significantly alter the initial purpose of the bill. We continue to support Senate Bill 652.

First chamber analysis below:

A franchisor-franchisee business relationship generally comes downs to a business model, trademarks and marketing techniques: the franchisee buys from the franchisor the right to use a trademark, provide specific products and use a business model. In order to maintain the reputation of the brand name or trademark and the overall quality of the products sold under this brand name or trademark, a franchisor usually makes sure the business model is respected and can sometimes offer training support to a franchisee. But the franchisor is not the franchisee's employer; the franchisee is comparable to an independent businessman, hiring and firing his own staff,  implementing human resources management to and respecting labor-related law for his own franchise.

Senate Bill 652 reaffirms this distinction, excluding franchisors as employers of either franchisees or franchisees' employees. This bill would prevent franchisors from being sued and held liable for actions their franchisees are responsible for. Senate Bill 652 hence favors personal responsibility and supports the free market system. We support this bill.