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Committee tables franchise fairness bill after constitutional concerns
Summary
A Senate bill to restrict franchise contract clauses and limit noncompete terms was tabled 6–4 after committee members raised U.S. constitutional and commerce-clause concerns and requested further study.
Senator Joseph Sanchez introduced Senate Bill 439, a measure aimed at tightening state oversight of franchise contracts to protect franchisees from what sponsors described as unfair franchisor practices.
The bill, presented by Senator Sanchez with expert witnesses, would limit certain franchise contract provisions that sponsors say concentrate bargaining power with franchisors. Jen Paul Schreier, introduced to the committee as “Jen Paul Schreier, former cabinet secretary,” told the committee the proposal would ban or restrict several contract practices and limit post-contract noncompetes to two years, aligning New Mexico with roughly 15 other states and recent Federal Trade Commission guidance. "The franchising sector is a very interesting relationship … the balance, the power is with the franchisor," Schreier said.
Jason Espinosa, state director for the National Federation of Independent Business, added that the bill would "protect small businesses and strengthen New Mexico's economy." Senator Sanchez said the measure is intended to "equalize the playing field so that way there are fair business practices here in New Mexico."
But committee members raised legal doubts. Senator Jaramillo pointed to the committee analysis and state and federal constitutional provisions and asked whether the bill would run afoul of the U.S. Constitution's Contracts Clause and the Commerce Clause and cited the New Mexico Constitution's Article II, Section 19. After the sponsor deferred to the witnesses, Schreier said the Office of the Attorney General had expressed “significant interest” in the measure and that other states had enacted similar statutes.
Senator Paul moved to table the bill, calling for more time and interim conversations. The motion to table passed 6–4, halting further action in committee pending additional work and legal review.
Why it matters: sponsors argued the bill protects local franchise owners who invest their savings and are often bound by national contracts that limit independent purchasing and impose long noncompete periods. Opponents and some committee members said the constitutional and interstate-commerce risks need thorough review before New Mexico adopts statutory limits.
What’s next: The tabling motion passed 6–4, and the sponsor and committee members suggested follow-up conversations during the interim and consultation with the Department of Justice and counsel to resolve constitutional questions.
