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Show The Enterprise Review , May 12, 1976 Page 5b Legislation Seeks to Remedy Franchise Abuses Continued from page lb chisee according to the bill. franchise industry, he said, will be the threat of terminacf the Proponents bill, tion and the like as related to the International including quality control by the franFranchise Association, (IFA) chisors. feel that termination rights Fee arrangements by conaccount for the majority of tract are becoming very open abuses within the industry and ended, he said. "They were that antitrust laws cannot too stringent and in favor of effectively deal with the prob- the franchisor, but most are lems concerning termination being revised." rights. Requiring a franchisor to Some franchisors argue supply information concerning against Moss' bill saying it holders of the same type of would deprive them the power franchise in their area along to control quality that, they with information about recent say, can come only from openings and failures will be termination powers. There a nest of worms. would be so many extenuating Specialists circumstances." famihe wasn't In light of the FTC rulings, Admitting liar with all the proposed Nord said there is definitely a legislation and FTC regulaneed for a more current study D. of the franchise industry than tions, franchisor Robert of Tree the House, the 1971 SBA study. "FranLanglois declined full comment saying chisors have already weeded he relied on a franchising out most of the specialist to keep abreast of he said. Rather than more governproposed changes. He did say will not regulation hamper ment regulation, Nord would legitimate franchisors, but like to see national guidelines rather those who are margin- instead. And laws, if they are al. He added the problem, in to be made, should be on a essence, will be in having to more organized basis. contend with more government regulation. Contract Fair The franchise specialist he Fred Cevar, Jr., holder of speaks of is Richard Nord, the Tinderbox franchise at president of Intermarketing, Fair Mall, said his Inc., an Ogden based firm that Valley contract arrangements are markets franchise packages fair. He explained certain nationwide. Intermarketing, parts of the contract are locally, arranged the Hilton unenforceable, but Hotel franchise in Salt Lake probably the franchisor realizes that. City. Cevar recognizes the need Full disclosure by the franfor quality control by the chisors is to Nords liking, but franchisor and added that the requirement should apply those franchisees who comto old as well as new franchise plain the most about their Discompanies, he said. contract arrangements are closure," he adds, "separates those with the lowest the wheat from the chaff, and usually most reputable franchisors profits. Unique Problems already make this information available." Chris Buttars, director of "Purchasing obligations are the since Utah Association of Petromost not a major hurdle, companies are revamping leum Retailers believes the their programs on buying," gasoline service station franHe explained chisee is plagued with probsaid Nord. cancellation, or failure to lems not found in the rest of renew a franchise is a major the franchise industry. According to him, the basic problem in the gasoline service station area, "But termiproblem of independent sernation to force buying is being vice station owners is that exempted by most upcoming their buying agreements lock them into a discriminatory companies." The major issue in the situation. s," Franchisors, he said, sell their gas at two wholesale . price levels. As an example, he cited Conoco selling gas to franchisees at 48 or 49 cents a gallon delivered, and allowing Fina to bring in their own tank truck and buy the gas at a rate 5 to 9 cents below the price given to the Conoco franchise holder. Buttars said the service station franchisees are not afraid of closure, but fear being forced out of business. He doesn't believe these types of arrangements allow for competition in a free market system. He claims none of the pending legislation or FTC rulings will alleviate abuses in the gasoline service station franchise field. On the other side of the fence is Carrol G. Clement, a marketing supervisor for Conoco who said Conoco has a product exchange agreement with Fina. He explained that in some areas Fina has refineries and Conoco doesnt. The situation in Utah is reversed to where Conoco has a refinery and Fina doesnt. This situation makes for an equal product exchange between the two that ultimately benefits both the oil industry and the consumer, he said. Those involved in the legal aspects of franchising, specifically in the gasoline service stations field, are anxious to see the outcome of the Moss and Mikva hearings. Future of Franchising What is the future of franchising? Studies by the IFA have revealed that of the 70 to 80 companies who entered the franchise field from 1972 to 1974, 20 were newly organized while the rest were established firms entering the franchise system for the first time. vIn 1975, an additional 100 companies entered the trend to continue for the next few years. According to the IFA, 1976 entrants will offer new services such as bottled soft drinks sold by the case in drive-i- n retail stores, checking services providing retail stores guaranteed payment of personal checks, complete interior office layouts including furniture and equipment as well as secretarial and clerical . staff fo? businessmen in major cities, and installation of solar furnaces in homes. As the most significant expansion among the newer methods of franchising, the IFA forsees real estate brokers adopting the franchising system. The IFA reports the overall outlook for franchising is promising, and it will remain a viable method of distribution of goods and services. or listed markets, we can do it. O-T- -C Wilson-Davis one of the oldest brokerage firms in Salt Lake City. We have the men, the knowhow and the facilities to handle any stock transaction or on listed markets. We're the only Salt Lake brokerage house with NASDAQ facilities. 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Utah 84111 0W .N the Ph. 532-13- 13 0 industry, and the IFA expects Agency to Discuss Tax Increment Funds The years first public hearing regarding use of tax increment funds will be held May 18 at 7:30 p.m. and May 19 at 10:30 a.m. in the Salt Lake City Commission Cham- bers. -- Director of the city Redevelopment Agency, Mike Chitwood, will discuss the agencys three main South and South Temple. Tax increment financing, approved by the Utah State Supreme Court in July, 1975, permits the use of increases in property tax revenues within a 13 block downtown area to pay part or all of the cost of improving the area. As the area is improved, the property valuation increases, resulting in greater tax revenue from the same property without increasing the rate of tax levy. Uses of the tax increment money must be approved annually by the city commission after two public hearings. objec- tives for use of tax increment money. 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