S-3163

AN ACT Relating to the relationship between franchisors and franchisees; amending RCW 19.100.250 and 19.100.190; and adding a new section to chapter 19.100 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 19.100.250 and 1972 ex.s. c 116 s 15 are each amended to read as follows:

(1) The director may from time to time make, amend, and rescind such rules, forms, and orders as are necessary or appropriate to carry out the ((~~provisions~~)) purposes of this chapter including rules and forms governing applications and reports and defining any terms whether or not used in this chapter insofar as the definitions are consistent with this chapter. The director may classify franchises, persons, and matters within the director's jurisdiction, and prescribe different requirements for different classes. No rule, form, or order may be made unless the director finds that the action is necessary or appropriate in the public interest or for the protection of franchisees and consistent with the purposes fairly intended by the policy and provisions of this chapter.

(2) The director in ((~~his~~)) the director's discretion may honor requests from interested persons for interpretive opinions.

NEW SECTION. Sec. 2. A new section is added to chapter 19.100 RCW to read as follows:

If the director finds with regard to any classification of franchise established by rule that adequate regulation cannot be achieved by the means of the registration provisions of RCW 19.100.040 through 19.100.110, for the reason that franchisees lack the customary education, business experience, or English language skills, the director may make, amend, or repeal such rules, forms, and orders as are necessary or appropriate for the protection of franchisees to require the franchisor to provide any one or more of the following:

(1) A cancellation period of up to thirty days from the date of sale of the franchise;

(2) An offering circular as required by RCW 19.100.040 and any addition or amendment under RCW 19.100.070 in a language other than English;

(3) A purchaser representative including, if necessary, a translator fluent in the language of the franchisee prior to the date of sale of the franchise; or

(4) A limitation on the sale of the franchise requiring that the franchisor and any person acting on its behalf shall have reasonable grounds to believe and after making reasonable inquiry does believe that the investment is suitable for the franchisee upon the basis of the franchisee's financial situation and needs.

Sec. 3. RCW 19.100.190 and 1972 ex.s. c 116 s 11 are each amended to read as follows:

(1) The commission of any unfair or deceptive acts or practices or unfair methods of competition prohibited by RCW 19.100.180 as now or hereafter amended shall constitute an unfair or deceptive act or practice under the provisions of chapter 19.86 RCW.

(2) Any person who sells or offers to sell a franchise in violation of this chapter shall be liable to the franchisee or subfranchisor who may sue at law or in equity for damages caused thereby, for rescission, or other relief as the court may deem appropriate. If the court finds that the franchisee has been exploited by reason of lack of education, business experience, or English language skills or fluency, the court may in lieu of other relief grant rescission. In the case of a violation of RCW 19.100.170 rescission is not available to the plaintiff if the defendant proves that the plaintiff knew the facts concerning the untruth or omission or that the defendant exercised reasonable care and did not know or if he or she had exercised reasonable care would not have known of the untruth or omission.

(3) The suit authorized under subsection (2) of this section may be brought to recover the actual damages sustained by the plaintiff and the court may in its discretion increase the award of damages to an amount not to exceed three times the actual damages sustained: PROVIDED, That the prevailing party may in the discretion of the court recover the costs of said action including a reasonable attorneys' fee.

(4) Any person who becomes liable to make payments under this section may recover contributions as in cases of contracts from any persons who, if sued separately, would have been liable to make the same payment.

(5) A final judgment, order, or decree heretofore or hereafter rendered against a person in any civil, criminal, or administrative proceedings under the United States anti-trust laws, under the Federal Trade Commission Act, under the Washington State Consumer Protection Act, or this chapter shall be regarded as evidence against such persons in any action brought by any party against such person under subsections (1) and (2) of this section as to all matters which said judgment or decree would be an estoppel between the parties thereto.