House subcommittee advances bill barring forced noncompetes for franchisees (SB240)

A Virginia House subcommittee on Feb. 26 advanced SB240, a bill that would stop franchisors from forcing noncompete agreements on franchisees except in limited sale circumstances. Delegate Helmer, presenting the bill, said the substitute narrows the measure to allow noncompetes only when a franchise changes hands: “the basis of the bill is the idea that you can't force a noncompete agreement onto a franchisee,” he told the committee.

The substitute clarifies that when a franchisee leaves an agreement the franchisor may not unilaterally impose a noncompete; the text preserves a reasonable noncompete when a franchise is sold to a buyer, which Helmer described as a commonly accepted exception. Melissa Assalone, speaking for the International Franchise Association, described the group's position as neutral while thanking the patron for negotiations on the amendments.

Representatives for McDonald's and several franchise groups said they worked with the bill sponsors to reach language both sides could accept. After brief committee discussion the motion to report the bill as substituted carried by voice vote and was posted to the larger committee; the clerk later recorded a 7-0 roll call reporting the substitute to the full committee.

The measure now moves to the next committee for further consideration; sponsors said the substitute was intended to avoid a conference with the Senate by aligning the House and Senate versions.