Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: It's going to keep us busy. We are live. We are live. This is Senate Finance. This is Wednesday, April 1, we are going to bill that are referred to us. And today we're gonna pick up 07:33, and I'm relating designating a franchise relationship. And we have Representative Nicholas with us and you were the sponsor. I was the reader. Okay, so come on up and just tell us what motivated this film. A little wonder, I guess.

[Rep. Nicholas (House Commerce; bill sponsor)]: One of the things we've been working on in house commerce is looking at a variety of different non compete clauses, and this bill was born out of possibly looking at non compete clauses specifically for franchise owners because they deal with they may deal with a certain amount of different there are certain dynamics in a franchise that you wouldn't see in a traditional business. As we've gotten to talking about it, we've realized that we really don't know what businesses are franchises and what aren't in the state of Vermont. So what we did is we didn't feel like we had enough information to start regulating non VPs without knowing exactly what we were talking about. So we stripped down the bill and just basically turned the bill into a situation where it would now be required when you go to the Secretary of State's office, you have to check whether it's a franchise or not, and if it is, then the name of the franchisor and whether you're a franchise or a franchisee. That's pretty much it. The the point of it is we want to start to build a database of businesses we know were franchises. And then maybe in '26 or whatever, out or '27, '28, reach out and find out, maybe get a little better testimony on who's, you know, what kind of problems are you dealing with with non competes and things like that.

[Sen. Ann Cummings (Chair)]: Okay.

[Rep. Nicholas (House Commerce; bill sponsor)]: That's pretty much it.

[Sen. Ann Cummings (Chair)]: Okay. Sounds simple enough. I hope we can get it out of here simply.

[Rep. Nicholas (House Commerce; bill sponsor)]: Yeah. And and it's a simple enough one. I mean, it could be combined with something else if you wanna put it in. I mean, it's not all that big. So

[Sen. Ann Cummings (Chair)]: Can I ask

[Sen. Ruth Hardy (Member)]: you a question? Sure. What is this started out as a bill about non complete peak clauses? Correct. And how did the franchise thing come into effect? Was it non compete across all businesses?

[Rep. Nicholas (House Commerce; bill sponsor)]: This bill was specific to not to a franchise.

[Sen. Ruth Hardy (Member)]: Okay. So franchise is just as an example, like

[Rep. Nicholas (House Commerce; bill sponsor)]: Like a McDonald's or something.

[Sen. Ruth Hardy (Member)]: It was noncompete between franchises.

[Sen. Ann Cummings (Chair)]: So if

[Sen. Ruth Hardy (Member)]: you lived worked in the Middlebury McDonald's, you would have a non compete clause with the Burlington. Burlington.

[Sen. Ann Cummings (Chair)]: Well, it's in I

[Rep. Nicholas (House Commerce; bill sponsor)]: mean, just to clarify, it's more about the franchisor franchisee because in a lot of situations, the franchisor will make a franchisee owner sign a non compete clause. Maybe the franchise doesn't work out, and now

[Rep. Nicholas (House Commerce; bill sponsor)]: they can't work.

[Sen. Ruth Hardy (Member)]: It's not between the employees. It's between the owners of the franchise. Oh, right. I see. Okay. Okay.

[Sen. Ann Cummings (Chair)]: You can't give up your McDonald's and go set up a Burger King across the street.

[Rep. Nicholas (House Commerce; bill sponsor)]: Exactly. And and, you know, and, you know, we've heard so I mean, we don't know obviously that as part of the point, but, you know, some some some of these franchisers are charging they're forcing you to use their equipment and charging ridiculous amounts of money for the equipment. Some of them are forcing them to forcing for franchisees to buy their product from them, different things like that. And that's why we felt it was important to take a look at this, but we wanna make sure we knew fully what we were dealing with before Okay. We went too much

[Sen. Ann Cummings (Chair)]: Questions, committee. Thank you.

[Rick Segal, Office of Legislative Counsel]: Good afternoon. Rick Segal with the Office of Blindsey Council. I feel like I either have bills that are one page or 100 pages.

[Sen. Ann Cummings (Chair)]: Well, seems to be quite a discourse.

[Rick Segal, Office of Legislative Counsel]: It's actually a two page bill, pardon the back. So a couple of points. Senator Hardy asked about the the originality of the bill. So there may be some confusion. As introduced, this bill would have regulated franchise in many ways. There's another bill in house conference, h two zero five, that was a specific non compete on franchises and on.

[Sen. Ruth Hardy (Member)]: Okay. That's the one I was

[Rick Segal, Office of Legislative Counsel]: That bill was sitting in congress. Okay. It didn't exit that committee. He got recommitted that committee. So this bill, very simple. It's very limited in what it's doing. And the intent may be to eventually, once we see the landscape of franchises in Vermont, is to then regulate the franchises. But all this is due is when a business and I I can't you the bill, but when they make a filing, which could be when they register with the state, when they file a report, when they file amendments, when they do a filing, they will be asked, you know, are you a franchise or a franchisee? There'll be a box, and David Hall here, he can explain how it may work. You'll click the box, and then if you are a franchisee, you will type in the name of your franchise. So if you're A and B Burger Company, but you're McDonald's, that's your franchisor, you would type in McDonald's as your franchisor. That would give the secretary of state and then you all have a better idea of how many franchisees, fours you have in the state, and is is there just a number of franchisors with one or two franchisees each, or is it a different number altogether? So that's really all this is doing. There's no extra fee, there's no really any other arm and except that you type in, you click a box, and they would often explain how it would work. And the effective date being July or January 1 is to give them time to update their system, because there will be some work on their end to ensure that the system can accommodate this new question we can possibly.

[Sen. Ann Cummings (Chair)]: So I think if you tighten up your spacing, this could be a one page bill.

[Rick Segal, Office of Legislative Counsel]: Madam Chair, it could be.

[Sen. Ann Cummings (Chair)]: That's why we're releasing one. Reach the font. Come on. Did you not

[Rick Segal, Office of Legislative Counsel]: No. You can start. We do our eyes to the back of this, and I would get slapped by a draft if I submitted something.

[Sen. Ruth Hardy (Member)]: But your

[Sen. Ann Cummings (Chair)]: kid was three. It's a I'm surprised it's here in the economics. Well, it sounds odd. It's what are

[Sen. Ruth Hardy (Member)]: I mean, come on, Bloomberg.

[Sen. Ann Cummings (Chair)]: I've given up trying to understand some of the referrals, but this is probably financial regulation of businesses or in the underlying bill, which I gather was much larger. This is just a checkbox on. Yeah. So any questions on this? You won't get the pill. Thank you. Sure. Okay. David. One up. Don't throw a wrenches.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: I didn't bring any wrenches with me. Good afternoon. David Wall, director of business services division, Secretary of State's Office. Can't seem to pull this up. I'm not sure if it's the site or if it's me. But it's only, what, one page? Yeah. Not not a lot of 733, right? Okay. We're in the right place. Yep. Yes, so, I mean, this is Secretary of State's office because we'd be the one administering the chat box, if you will. It's structured so that basically anytime you come back to our online system, you're supposed to let us know. It goes into your database record. It wouldn't go into necessarily your, you know, your your filing document, like your articles of organization wouldn't say, I'm a franchisor or a franchisee. It would just be part of our data collection. Envision this being a sort of a other kind of last step in the process where people will answer questions that you all want them to answer such as are you a franchise or do you provide education technology software, other things in

[Sen. Ann Cummings (Chair)]: the What if tell us you're a franchisee? Yeah. So we could regulate with you.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: Yeah, basically. I, you know, I do, I wanna, as Rick indicated, there's no fee change, there's no appropriation. I, you know, it's incumbent upon me to say for the record that there is a cost associated with this. We think we can absorb it for now, and probably will take a simple little bill, right? That's what we always say.

[Sen. Ann Cummings (Chair)]: It will

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: probably take five months of work on the IT side to build a new step in the flow to make sure the coding works with the rest across the system. You know, it doesn't turn anybody's hair blue in some other filing module. So we can do it. It'll take a little time. We'll have about January, should be good. The data is gonna have a lag, you know, so all new people who come will answer the question. The people who already will answer the question either when they file an amendment or they come back for the annual reporting season or some other document. So I give it six, nine months, probably have a pretty good portfolio of who is what. Yeah. Okay. Yeah.

[Sen. Ann Cummings (Chair)]: And now we know why it's here because there is a potential for a future fee if it gets caught or becomes difficult. We have gotten a few of those this year. But at this point, there is no me. We think you can do it without a whole lot of angst. Mhmm. It would provide some information necessary for us to know what is happening in the business community. We may I mean, some things that have national names are fairly obviously franchises, but we may find out there's franchises that don't use the same name, that we may find out things we don't know.

[Sen. Ruth Hardy (Member)]: So Let us do for your checking boxes. Yes. Is there anything else that we might want information on that we should add to this?

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: I'm agnostic on the information. I just build it. It's, are your franchisee franchisor, no? And then if you click the yes box, the franchisee, as it's currently constituted with call for you to enter the franchisor. Not the other way around, so that allows the franchisees to report who can have that relationship. I mean, are other bills with other constructs that sort of contemplate, you know, more data gathering in our division, and I think, you know, we're probably the only place besides tax in state government that has some nexus to almost all businesses that operate, so I suppose it makes sense that we are the registry people. We have the capability to collect that data. And, you know, we are in the market for a really cool visualization tool, a business data as a service tool that would help aggregate and then slice and dice and present our data better. So there We could be looking down the road at more voluntary reporting, long run businesses, business by county, business by, you know, industry. Our creativity is the limit, or your creativity is

[Sen. Ann Cummings (Chair)]: the Yeah.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: But for this build, I don't have any more to

[Sen. Ruth Hardy (Member)]: Okay. Add to it. Well, I was just thinking, if you're gonna go through this process of updating the flow Mhmm. Then we might as well Right. Have you do it once, right? Sure. Year, one little checkbox that we add.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: Yeah, it's a great thought. I anticipate building this in anticipation of that. So, I said, it would be, if you go to any of our modules or workflows for different kinds of businesses, you'll see there's steps along the path. I would see this being the last step before you get to the review screen, and that's the place we nest these types of questions. That makes it easy for people who 200 doesn't apply. They can just ignore it and keep going, but, you know, right now it's franchisees, maybe tomorrow, like I said, it's ed tech software providers, it's greedy businesses, maybe it's solar companies, I don't know.

[Sen. Ann Cummings (Chair)]: Once we find out about the franchise, depending on what we find out, we may say, oh, well, we need to refine that or get more. But at this point, it's all we're looking for. Just we don't know what's out there or how many and Okay. Yeah.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: So this will be that framed in the beginning. Okay.

[Sen. Ruth Hardy (Member)]: With some details. Easily add another checkbox. Yeah.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: Yes. Okay. You see the wheels turning. I've got some more checkboxes

[Sen. Ruth Hardy (Member)]: in the future. I've no idea. I'm just thinking you guys will save some time, money.

[Sen. Ann Cummings (Chair)]: Okay. Any other questions for anyone? Committee, I'm gonna put this on for both.

[Sen. Ruth Hardy (Member)]: We're gonna make Mattos before then.

[Sen. Ann Cummings (Chair)]: Yeah. We'll make Matt no. I'm not gonna vote it today. I give it at least twenty four hours, but I may put that on for a vote tomorrow or at least by Friday before we get ourselves into trouble. So thank you. Good to see

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: you all. I'm sure I'll see you again. No. Not in the next two weeks.

[Rick Segal, Office of Legislative Counsel]: If you need me in the next

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: two weeks, you better call Warren. I won't be here.

[Sen. Ruth Hardy (Member)]: Take care. Have fun. Have a

[Sen. Ann Cummings (Chair)]: great one.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: I want to see my daughter in Ireland.

[Sen. Ruth Hardy (Member)]: Oh. Nice. They've traveled.

[Sen. Ann Cummings (Chair)]: My kids just went to Russia. No. Ireland. They're in they're not

[Sen. Ruth Hardy (Member)]: in Russia, man. No. In Russia and Senegal, though, that's wow.

[Sen. Ann Cummings (Chair)]: Two more months right now. College. Six six months inside the area. The Okay.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: Let's It's taking fortune where it goes.

[Sen. Ann Cummings (Chair)]: Yeah. Alright. We are not scheduled for anything until 02:30. We got miscellaneous attacks today. Between that and five eighty five, we did yesterday. Looks like they took three insurance bills and put them to yeah. But we're gonna separate them out, and we'll get testimony on each one separately.

[Rick Segal, Office of Legislative Counsel]: Uh-huh.

[Sen. Ann Cummings (Chair)]: I'm trying to remember what they learned when we get them up. One is the reworking of the Blue Cross Blue Shield Board of Directors of our staff.

[Sen. Thomas Chittenden (Vice Chair)]: One to Blue Cross

[Sen. Ann Cummings (Chair)]: and Blue Shield to come in. Anybody else you would like to hear from on that one?

[Sen. Thomas Chittenden (Vice Chair)]: I don't know if you wanna hear from them, but Planned Parenthood sent an email, and I think they made a pretty good case to be concerned about this appointment. So both having politically appointed positions with a non profit.

[Sen. Ann Cummings (Chair)]: It wasn't clear yesterday. I have reservations about that press. Yeah.

[Sen. Thomas Chittenden (Vice Chair)]: I don't think they're an associate umbrella association that represents nonprofits and commodity?

[Sen. Ann Cummings (Chair)]: Something like that? Yeah. There is. Yes.

[Sen. Thomas Chittenden (Vice Chair)]: Looks complicated.

[Sen. Ruth Hardy (Member)]: Common good. Common good. Yeah. Yeah. They also emailed us, I think.

[Rep. Nicholas (House Commerce; bill sponsor)]: Yeah.

[David Hall, Director, Business Services Division, Vermont Secretary of State’s Office]: Yeah. Okay.

[Sen. Randy Brock (Member)]: Frankly, it's more of a risk with nonprofits. Because so often nonprofits are socially or ideologically grounded, and as a result, I think that you have greater likelihood of having bias in the board that's appointed by most of the nonprofits that we have here.

[Sen. Ann Cummings (Chair)]: So we will hear from them. We'll definitely hear from Blue Cross. I don't know if the governor would like to talk to us. People would like to talk to us. We can send Jason a note and ask if anyone would like to talk to us.

[Sen. Thomas Chittenden (Vice Chair)]: I said, probably yesterday, he's he's the guy who's running running running along super Yeah. He's.

[Sen. Ann Cummings (Chair)]: He even went out. It was a little, I think, technical correction to prior auth bill. I know with and I know those things have been being negotiated trying to keep our second health care provider in here. If

[Sen. Thomas Chittenden (Vice Chair)]: you're jumping around on the bills, I think we got an email from representative North. Did you want Heather to talk about an amendment to this bill, the section 11?

[Sen. Ann Cummings (Chair)]: Which bill? To which bill? Section 10.

[Sen. Thomas Chittenden (Vice Chair)]: Section 10. So H five eighty He

[Sen. Ann Cummings (Chair)]: said it's a bill that we just did?

[Sen. Thomas Chittenden (Vice Chair)]: No. H five eighty five, the bill we're talking about right now.

[Sen. Ann Cummings (Chair)]: Oh, the the sorry.

[Rick Segal, Office of Legislative Counsel]: I'm Insurance three bills in one. Yeah. So I don't even

[Sen. Thomas Chittenden (Vice Chair)]: know what section 10 is, but

[Sen. Ann Cummings (Chair)]: Okay. And then we have association culture plans.

[Sen. Thomas Chittenden (Vice Chair)]: But she raised the current level lawsuit that's going through, is that the one?

[Sen. Ann Cummings (Chair)]: That's the one. I think I did some of the history yesterday, but they were, and then they were outlawed, and then Trump won with them back in, and they were so loose. Basically, people in Vermont could form an association health plan with people in California, and it was a lot of the short term duration health plans, and we spent a lot of time trying to put some guardrails around that, and we're just coming to where we were gonna have to make a decision about allowing them, which no matter which way we went, would be extremely painful for one or the other group, and the federal government said, nope, they're not going to be allowed in general, and we were off the hook. Apparently, those limited circumstances have remained in play. I think we heard here it was the car dealer's association. You have to have a much tighter association than just being a member of the Chamber of Commerce. Colorado, they said, had opened it up to just general associations anticipating that federal government was going to open it up. They are in court. I'm a little probably gun shy of trying to do this again until the lawsuit or the federal regulations are set given kind of the erratic, I'd much rather try to do some work on the impact that we're seeing in the exchange in health insurance and I had hoped this bill was going to reflect some of the work that's been going on in health and welfare and it doesn't. This has a market. Okay, section six is the coding rule. There's a change that's been a work in progress. Site neutral reimbursement for physical therapy, we will have the physical and the occupational therapist in. It sounds like any facilities, even if it is separate from the base charge, but What what this

[Sen. Ruth Hardy (Member)]: is for physical therapists? Therapists.

[Sen. Ann Cummings (Chair)]: Oh. If you go to the rehab gym, which has a soaking Oh, no. Yeah. Alright. Stoking, they have physical therapists that are not sure they have athletic trainers. You could go there, but they get paid a couple of years ago we got them their first raise in ten years from the insurance companies, but they're competing in an open market for physical therapists and they, like many agencies, can't afford to compete with the hospitals that are getting that facility's fee plus higher rates. So, there is a physical therapy association, and I know the rehab gym would be happy to come in and talk to us, and we'll take some more on that, but I don't think that's what you're about. Ah, yes. And then section 10, that's the health care shared plans. They're here. They talked to me yesterday morning. I'm pretty sure it was them who wanted to talk to me again yesterday afternoon. They were sitting here. There's a gentleman Knoxville, Tennessee with them. He bought James Brown's radio station. EJ Strauss. EJ Strauss. And he I think they introduced him as a member of the health insurance committee in the Tennessee legislature. He was here visiting yesterday. We did look at a less extensive registry. This is pretty extensive, and I'm pretty sure they're going to have checked. We didn't and this is this one they also said there had been a lawsuit on? Yes. They did. I thought so. And last time, we was this the one in non association plans?

[Sen. Thomas Chittenden (Vice Chair)]: I think so. Oh, okay. We

[Sen. Ann Cummings (Chair)]: will take some testimony, but last time this came through, we didn't pass it. I believe with the advice of consent of DFR being concerned that once they registered and sent information, they could bill themselves, you know, tell people, well, the Department of Financial Regulation looks at all our numbers and give them more legitimacy than I think many people are willing to give them. The bottom line is there's no requirement that they have reserve funds, that they have any financial oversight on their ability to pay claims. At least one large one, I believe in Boston, went belly up a number of years ago. Yeah. Here your insurance company goes belly up. There is a fund so that the until another insurance company will take over, that all insurance companies pay into, but there is protection if something goes wrong here, there isn't with them. So that's the one in there, And if that's where the suit is, I just soon not do it, and we'll I guess we're gonna have to look at association. I think that's what representative Martine Larocque was talking. Representative? Morse. Okay. Okay. So

[Sen. Ruth Hardy (Member)]: any

[Sen. Ann Cummings (Chair)]: I think probably feels difficult well, the one to which there are no really good answers is the association plan. It could offer help to some of the folks that have dropped off off the exchange, depending on sometimes employers will offer insurance if it's reasonable or not. So in that case it could help. But I think it's the Blue Cross Blue Shield of Fours that might So we know the nonprofits wanna talk to us. It does does precedent. We do the government does, put several representatives on the PSAC board, but that is a board that deals with the moral credit of the state, not the full faith in credit, but the moral obligation. It's a semi governor or government organization. It is not an independent business. So let me know if who you hear from and who would like to speak with. We will do that. And we will Okay. We are out there until 02:30. I can't get used to this.

[Rep. Nicholas (House Commerce; bill sponsor)]: I

[Sen. Ann Cummings (Chair)]: think