Phoenix, December 14, 2025
Arizona’s House Bill 2038, introduced by State Representative Stacey Travers, seeks to establish regulations for franchise agreements, protecting small-business owners from unfair contract terminations. This legislation aims to address concerns of rising bankruptcy rates and empower local entrepreneurs against dominant franchisors. While it reintroduces previous efforts, debates around its implications continue, signaling potential national impacts in franchise law.
New Bill Aims to Protect Arizona Franchise Owners
House Bill 2038 Seeks to Regulate Franchise Agreements
Phoenix, Arizona – A new legislative proposal aims to bolster the protection of small-business owners venturing into franchise operations. Arizona’s House Bill 2038, introduced by State Representative Stacey Travers, intends to address the needs of franchise owners, particularly from larger national brands, by instituting regulations that govern franchise agreements and safeguard against arbitrary contract terminations.
This bill represents a persistent effort to improve the landscape for small-business owners in Arizona, echoing concerns amidst rising bankruptcy rates and economic challenges. Travers suggests that enhancing protections for franchisees is a step in the right direction to ensure fair play in the marketplace, where smaller entities sometimes find themselves at a disadvantage when faced with larger franchisors.
Understanding House Bill 2038
House Bill 2038’s central aim is to establish a framework for the relationship between franchisors and franchisees. A noteworthy aspect of this legislation is its provision that would prevent franchisors from terminating contracts with franchise owners without a “good cause” reason. This measure is intended to provide greater security and peace of mind for small-business owners who invest their resources into building a franchise under a recognized brand.
A Continuation of Previous Efforts
This bill is not a new initiative but a reintroduction of a similar measure from the 2023 session, identified as House Bill 2404. While House Bill 2404 garnered support in the House Commerce Committee, it ultimately stalled due to opposition, particularly from the International Franchise Association. The IFA expressed concerns that such regulations could lead to adverse effects on local business ownership opportunities, depicting the proposed rules as overly ambitious.
The Case for Stronger Franchise Laws
Representative Travers’s advocacy for this legislation acknowledges the precarious environment in which small-business owners often operate. Battling against current economic headwinds, many franchisees report feeling vulnerable to the practices of larger franchisors and their ability to enact quick contract changes. This sentiment amplifies the call for more stringent protections that could nurture an environment where local entrepreneurs feel empowered to succeed.
Potential Nationwide Implications
If House Bill 2038 encounters significant opposition in Arizona, the stakes may escalate to a national level. A related initiative, the American Franchise Act (House Resolution 5267), is currently being considered in Congress. This bipartisan measure aims to clarify the definition of a “joint employer,” a change that could influence liability for labor law violations affecting franchise businesses, and potentially reduce litigation costs for small-business owners.
Conclusion
The progression of House Bill 2038 will depend on the support it attracts during the legislative process. If successful, it could herald a new era of protection for small-business owners operating franchise chains in Arizona. As the local business community eagerly anticipates the outcome, individuals are encouraged to engage with their representatives and advocate for policies that nurture entrepreneurship and economic growth in Phoenix.
FAQ
- What is House Bill 2038?
- A bill introduced in Arizona aiming to protect small-business owners operating franchise chains by regulating franchise agreements and preventing unfair contract terminations.
- Who introduced House Bill 2038?
- State Representative Stacey Travers, a Democrat from Phoenix.
- What does House Bill 2038 propose?
- The bill seeks to establish regulations for franchisors and franchisees, particularly those operating large chain restaurants and businesses, and prevent franchisors from terminating contracts with business owners without a “good cause” reason.
- Is House Bill 2038 a new proposal?
- No, it is a reintroduction of a similar measure from 2023, House Bill 2404, which passed the House Commerce Committee but did not advance further.
- What was the opposition to the previous bill?
- The International Franchise Association (IFA) opposed the bill, arguing that it would be the most “far-reaching franchise law of any state” and could negatively impact local business ownership opportunities.
- Why does Representative Travers believe stronger franchise laws are necessary?
- She believes that stronger franchise laws are necessary, especially amid rising bankruptcies and challenges faced by small-business owners under current economic policies, and emphasized the importance of providing protections for small-business owners against unfair practices by larger franchisors.
- Is there potential for national action on this issue?
- Yes, if the bill faces opposition in Arizona, there is potential for national action, as lawmakers in Congress are considering the American Franchise Act (House Resolution 5267), which aims to clarify the definition of a “joint employer” and could affect liability for labor law violations at franchisee businesses.
- What is the current status of House Bill 2038?
- The outcome of House Bill 2038 will depend on the legislative process and the level of support it garners from lawmakers and stakeholders.
| Key Feature | Description |
|---|---|
| Bill Name | House Bill 2038 |
| Introduced By | State Representative Stacey Travers, Democrat from Phoenix |
| Key Provision | Prevent franchisors from terminating contracts with business owners without a “good cause” reason |
| Previous Version | House Bill 2404 from 2023 |
| Opposition | International Franchise Association (IFA) |
| National Legislation | American Franchise Act (House Resolution 5267) |
| Current Status | Awaiting legislative process and support |
Deeper Dive: News & Info About This Topic
HERE Resources
Author: STAFF HERE PHOENIX WRITER
The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
