On January 31, 2025, Maryland Delegate Korman introduced House Bill 992, also known as the Franchise Reform Act, aimed at updating the state's Franchise Registration and Disclosure Law. This legislation seeks to enhance protections for franchisees while streamlining regulatory processes for franchisors.

The bill proposes several key changes, including extending the time frame within which the Securities Commissioner can exercise certain powers related to franchise sales. It mandates that the exemption for franchise registration be adjusted according to inflation or deflation, ensuring that the law remains relevant in changing economic conditions. Additionally, the bill alters the statute of limitations for liability actions concerning franchise offers, providing franchisees with a clearer timeline for legal recourse.

One of the most significant provisions of House Bill 992 is the prohibition against franchisors impeding franchisees' rights to associate for collective purposes. This aims to empower franchisees, allowing them to organize and advocate for their interests without fear of retaliation from franchisors. Furthermore, the bill allows for legal action against franchisors under specific circumstances, enhancing accountability within the franchise system.

The legislation also introduces a pilot program that would enable the Securities Commissioner to waive certain franchise registration renewal fees, potentially easing the financial burden on franchisees and encouraging business growth.

As the bill progresses through the Economic Matters committee, it has sparked discussions among stakeholders. Supporters argue that these reforms are essential for fostering a fairer business environment and protecting franchisees from potential exploitation. Critics, however, express concerns that increased regulations could deter potential franchisors from entering the Maryland market, potentially stifling economic growth.

The implications of House Bill 992 are significant. If passed, it could reshape the franchise landscape in Maryland, promoting a more equitable relationship between franchisors and franchisees. Experts suggest that the bill's success may hinge on balancing the interests of both parties while ensuring that the franchise system remains attractive to new businesses.

As the legislative session unfolds, the future of House Bill 992 will be closely monitored, with potential ramifications for Maryland's business climate and the rights of franchisees at stake.