Governor Terry McAuliffe today vetoed House Bill 1394, which would categorically prohibit franchisees and their employees from being considered the employees of a franchisor. The Governor’s full veto statement is below:
March 17, 2017
Pursuant to Article V, Section 6, of the Constitution of Virginia, I veto House Bill 1394, which would categorically prohibit franchisees and their employees from being considered the employees of a franchisor.
As proponents of this legislation have acknowledged, franchisees and their employees are not considered employees of the franchisor in typical franchisor/franchisee relationships. However, the nature of that relationship is subject to a particularized fact-based inquiry, and in situations of dominant franchisors, the franchisees and their employees are de facto employees of the franchisors.
House Bill 1394 would relieve these dominant franchisor/employers of the obligations and responsibilities an employer owes to its employees. As a result of this blanket approach, it would fall to the dominated franchisees—usually small, Virginia-based businesses—to shoulder the burdens more appropriately placed on the dominant franchisor.
Healthy franchisee/franchisor relationships are an integral part of the business environment and play an important role as we continue to build the new Virginia economy. House Bill 1394 would undermine that effort by exempting dominant franchisors from their obligations to Virginia businesses and workers.
Accordingly, I veto this bill.
Terence R. McAuliffe