Longtime successful businesswoman, SBH member, Director, Corporate Secretary, and community volunteer, Jean Fukuda, died July 8. She was 58.

Fukuda and her husband Wayne, were the co-owners of Something Special! a gift store in Kaimuki and Wheatgrass Pacifica. They had previously operated retail stores in Kilohana Square, Kahala Mall and Windward Mall. Both were American pioneers in importing goods from Mainland China during the 1970s.

A former flight attendant for Pan American World Airways, and a Cherry Blossom Queen runner-up, the Roosevelt High and Tachikawa Language School grad always smiled and cheered any room or meeting and was the first to volunteer for any business project. Shy, and never seeking publicity, nevertheless, Jean was the subject of many business stories in local print and broadcast media and appeared in national stories on National Public radio, ABC-TV, CNN, USA Today and Forbes magazine.

The Fukudas were named SBH's first annual " Small Business Success" awardees in 1984. Jean was selected as SBH's "Civic Leader" awardee in 1989, and "Small Business Person of the Year" in 1993. She headed SBH's educational reform committee and served on several small business task forces and was helpful to the McKinley High School Business Learning Center, Hawaii Literacy and other community and educational causes.

SBH president and State Senator Sam Slom said, "We are all personally devastated by the loss of Jean to this state. Jean was the 'something special' in Small Business Hawaii and a true leader in Hawaii's small business community. Jean never had a negative word about another person and never complained about anything. She always cheered others, helped without question and was an inspiration to many people in this community. She was a role model and mentor to all business people, women, and young entrepreneurs.We thank God for allowing us to share and benefit from Jean's many talents and know she will continue to lead in another venue. Our sympathy and aloha to husband Wayne (who first helped computerize SBH), daughter Jeanine (a former SBH "Young Entrepreneur" leader), and family."

The SBH Board will adopt a fitting living educational memorial in Jean Fukuda's name in the near future.

LEGISLATIVE SPECIAL SESSION CANCELLED; ANZAI APPOINTED A.G.

Just as during the regular legislative session, serious disagreements between the State House and State Senate-dominated by Democrats in both houses- resulted in cancellation of a Special Session originally to be held this summer. The special session was urged to consider flawed bills passed at the end of the 1999 session in May, bills that missed the final deadline or "fell through the cracks," and possibly overturning some of the Governor's 45 vetoes. However,no Democratic Legislature ever attempted to override a Democratic Governor's veto since 1962. The Special Session might also consider recent Governor appointees requiring Senate confirmation.

The House wanted a limited session with a few specific bills and no veto override; the Senate, a more comprehensive meeting. As a practical matter, once a session is called, it could be expanded and that probably is what House leaders-and the Governor-feared. The public is still upset with the "do nothing" '99 Session and wasn't excited about the prospect of spending more money on the same lawmakers.

The next regular legislative session convenes January 19, 2000.

Anzai Appointment Raises Hackles

On July 6 Governor Cayetano named his choice for new state Attorney General: Earl Anzai, former Budget Director who was "fired' by the State Senate on April 28.

The Governor said of Anzai, "His legal experience in civil litigations combined with his knowledge in running a department are great assets. More importantly, his integrity is impeccable."

Integrity was one of the key issues in the Senate's 15-10 vote to deny reconfirmation. Democrat leaders in the Senate alleged Anzai had not been truthful with them on budget matters-specifically issues involving deficits or surpluses-and that he had wilfully disregarded the previous (Margery Bronster) Attorney General's opinion regarding debt limits and expenditure ceilings under his budget operations.

The point was made that the Governor wanted to retaliate against the Senate and that was the prime motivation for the appointment. The Governor denied the allegation. However, there are many (many!) attorneys in Honolulu; other choices for AG could have been Beedie Dawson former Deputy AG and harsh Bishop Estate critic; or Randy Roth, UH Law Professor, co-author of "Broken Trust" and president of the Hawaii Bar Association, or Senator Randy Iwase, former State Deputy AG, and supporter of Bronster. There were plenty of options for the Governor.

Anzai, a longtime political ally of Cayetano, never left state employ after the April Senate action. Cayetano appointed him special assistant to the Governor and "consultant" to the interim Budget Director at a salary the same as what he had previously earned ($85,000+). Some lawmakers wanted to know if he will now pick up 2 paychecks. Anzai had not practiced law in more than a decade. His past legal service to the Office of Hawaiian Affairs (OHA) and his wife's involvement as an attorney for Bishop Estate places Anzai in a conflict involving two of the largest cases before the Attorney general's office.

The Senate still must act on confirmation on Anzai. 12 of the 25 Senators are up for election next year and some feel it will be hard for the Senators to turn Anzai down after the recent Bronster debacle.

A reminder that the AG is NOT "the peoples' attorney;" he or she is the Governor's attorney.

Tax Relief, Good Bills and Hemp

While much was made of Governor Cayetano's 45 vetoes, nevertheless he deserves credit for signing a number of positive business and economic bills into law including: Act 70 (SB44) which exempts exported contracting work or services from the General Excise Tax (GET) and imposes a Use Tax on imported services of the same type, effective 1/1/2000; Act 71(SB638) reduces GET pyramidding beginning 1/1/2000 - even though it takes 7 years to become fully effective; Act 173 (SB1177) reduces 4% GET rate to 1/2% for condiment packets, sales of tangible personal property for resale at retail, and allows professionals to claim the 1/2% intermediary services rate effective 7/1/99; Act 178 (SB 1583) encourages high tech and provides broad tax credits; Act 198 (HB1197) conforms Hawaii income tax law to recent changes in the IRS code beginning 1/1/2000; Act 270 (HB170) allows taxpayers unreimbursed costs for long term care services and premiums as medical expenses for state income tax, effective with 1999 taxable year; Act 305 (HB32) the industrial hemp" bill - the subject of the closest vote during the '99 session (13-12 in the Senate) - provides for a private experimental crop plot to make Hawaii the first state in the nation to develop industrial hemp. A private firm, Alterna of California, presented the State $200,000 to offset any regulatory costs for the project. Alterna makes hair care products from hemp seed oil and must import it from foreign countries.

While these are good bills individually, no major action was taken during the 1999 legislature to truly "turn the economy around," or improve Hawaii's business climate while encouraging imported capital. That will be left to next year.

SBH/FTC RETAIL TRADE SEMINAR AUG. 24

Small Business Hawaii and the Federal Trade Commission (FTC) will present a special small business trade seminar on Tuesday, August 24. The Retail Merchants of Hawaii (RMH) will cosponsor the event open to all members and the public.

FTC Western Regional attorneys Dean Graybill (San Francisco) and John Jacobs (Los Angeles) will present a number of timely and informative trade topics especially tailored for small businesses in Hawaii. Special luncheon speaker will be FTC Commissioner Orson Swindle from Washington, D.C.

Sessions to be presented include:

* Trade Laws Applicable to Small Businesses in Hawaii including basic doctrines of "deceptive acts or practices," mail order and franchise rules, guarantees and warranties, trade association law, price fixing and predatory practices;

* FTC Laws Protecting Small Business consumer protection laws helpful to small business; scams against business; telemarketing fraud and deceptive advertising by competitors; antitrust and merger actions, and where to go for help;

* FTC and the Internet growth of Internet commerce; deceptive Internet practices; deceptive sales and service claims, FTC involvement in 'Net commerce.

During lunch, former Hawaii resident Commissioner Swindle will discuss practical consequences of the new commerce, competition, and consumer protection responsibilities.

The SBH/RMH FTC Trade Seminar will be held at The Ilikai Hotel Nikko Waikiki, Pacific Ballroom 9 am to 1:30 pm. Cost is $20 per person for SBH members (and their guests), $25 for non-members, and includes the full program, materials, luncheon and validated parking. Advance reservations are required by August 18. Mail check (to SBH) with name and firm or phone SBH 396-1724 (FAX 396-1726).

ALOHA FLEA MARKET VS. STATE POLITICS

SBH member Aloha Flea Market, Inc. filed a lawsuit against the Hawaii Stadium Authority and two employees, Edwin Hayashi and Deborah Ishihara.

The suit alleges that:

* The Stadium Authority has an exclusive contract with another concessionaire - Aramark, Inc. - to provide food and beverage service at all stadium events, including the flea market;

* Aramark has not provided flea market customers with the food they want at reasonable prices and has not opened enough food booths to adequately serve flea market customers;

* The Stadium Authority and its employees have refused to enforce their contract with Aramark or to address problems with the food service with the result that the flea market has lost money and suffered damage to its reputation.

The suit also alleges that the Stadium Authority has acted in bad faith by retaliating against Aloha Flea Market for supporting Linda Lingle in the 1998 general election. The suit charges that the defendants: "...with the express or implied consent of the Stadium Authority, exercised the discretion vested in them by the contract between the Stadium Authority and AFM in an unfair and unreasonable manner and in bad faith. The bad faith exercise of discretion was motivated, in whole or part, by the fact that during the 1998 general election AFM and Edward Medeiros refused to support the political campaign of incumbent Democratic Governor Benjamin J. Cayetano, who they had supported in the past, and supported his opponent, Republican candidate Linda Lingle. After Defendants learned that Plaintiffs were supporting Lingle, the harassment, discrimination, dishonesty, evasion, abusive conduct, abuse of power and failure to cooperate escalated."

Aloha Flea Market has operated at Aloha Stadium since 1979. "We have worked with five Stadium managers," said Edward Medeiros, the president of Aloha Flea Market, "and we have never had any problems until now."

He also said that since 1979 his company has paid the Stadium Authority more than $35 million in rent. "That's enough to pay for the Stadium. Its enabled the Authority to be self-sufficient and not have to dip into the general fund. Because of the rent we pay, high schools that can't afford to rent the Stadium for football games can use it for free, and we're proud of that."

Medeiros emphasized that as a businessman, he did not want to sue the Stadium Authority. "We want to run our business, not litigate, but the Stadium Authority left us no choice."

Medeiros said that the 9 member Stadium Authority Board refused to meet with him to discuss problems with the food service, and that in January of this year his attorney wrote to Governor Cayetano asking him to look into the situation. "We never heard one word from the Governor," Medeiros said. "He didn't even acknowledge receiving our letter. With the contribution we make to the state's economy, you would think the Governor could spare a few minutes to hear us out, but I guess not."

SMALL BUSINESS FRANCHISE
PARTNERSHIPS ENDANGERED?

Business partnerships between franchisees and franchisors will be endangered if Congress adopts legislative proposals being touted by U.S. Reps. Howard Coble (R-N.C.) and John LaFalce (D-N.Y.), the International Franchise Association (IFA) said recently. Congress has rejected similar bills by Rep. LaFalce in five consecutive Congresses - the 101st, 102nd, 103rd, 104th and 105th. In addition, 30 state legislatures have refused to pass similar measures.

Both franchisees and franchisors urged lawmakers during a House Judiciary subcommittee oversight hearing last month to refrain from interfering in free-enterprise contract negotiations, fearful that additional government intervention into small-business franchise relationships would inflict serious damage on the sector.

Even a co-sponsor of Coble's 1998 franchise mandate bill, Rep. Jay Dickey (R-Ark.), expressed fears of big government intervention in agreements between franchisees and franchisors.

"It would be absolutely horrible," Dickey, a former restaurant franchisee, told the subcommittee. "It would be a disaster to all franchise business if the federal government drafted the franchise agreement."

The panel heard franchisees and franchisors describe how such measures would restrict their agreements and hurt growth in the burgeoning business sector that employs eight million Americans, pumps some $1 trillion into the nations' economy annually and is rapidly spreading overseas as consumers embrace popular brands.

IFA members testified that additional regulation, while well intended, would hurt franchisees as well as franchisors, most of whom are themselves small businesses. Half of franchise companies in the U.S. have 50 fewer total units, according to an association study published earlier this year. Over half (53 percent) of the companies studied have more than 90 percent of their total units owned by franchisees.

Evidence of the stymieing effects of anti-franchising legislation on free enterprise can be seen in Iowa, where legislation similar to the Coble-LaFalce proposals was enacted in 1992. In the aftermath of the law's passage, some 130 franchise companies withdrew their business from that state or made the decision to not franchise there.

With American businesses and the nation's courts already hampered by excessive and expensive lawsuits, some members of Congress are worried that Coble-LaFalce type mandates would mean even greater legal burdens on small-business franchisors and franchisees who have limited resources.

IFA President Don DeBolt said such legislation would almost immediately set off an increase in lawsuits because it would destabilize the relationships between franchisees and franchisors.

IFA represents the interests of both franchisees and franchisors. The association's membership includes some 29,000 franchisees, 800 franchisors and nearly 300 consultants. Today, hundreds of thousands of franchised small businesses in the U.S. span more that 70 industries from auto services to restaurants to weight loss centers.

Editor's Note: Testimony made by IFA member franchisees and franchisors during the U.S. House Judiciary Subcommittee on Commercial and Administrative Law is available at http://www.house.gov/judiciary/5.htm. For the latest news and information about franchising worldwide, visit IFA's website: http://www.franchise.org.

UH ECONOMIC DEVELOPMENT CONFERENCE SLATED FOR AUG. 30 - 31

A Pacific region conference on how private businesses can form partnerships with community groups and government agencies will be held in Honolulu on Monday and Tuesday, August 30 - 31, 1999. The conference will be held at the Hilton Hawaiian Village Tapa Ballroom in Waikiki.

The conference, entitled "Partners in Economic Development," is being billed as "a coming together of ideas and resources to strengthen business opportunities in Hawaii and the Pacific Islands." It is especially targeted towards small business owners, community development organizations, government leaders and individuals in Hawaii and the Pacific Islands interested in learning about partnering for economic development.

The two-day conference will present the plans and processes of a variety of financial institutions and community economic development organizations. Breakout sessions will allow participants to meet one-on-one with representatives from various organizations to learn from the success stories of participating community-based organizations.

For more information, call PBCP at (808) 956-6286, fax (808) 956-6278, email ldang@busadm.cba.hawaii.edu, or visit the PBCP website:

http://www.cba.hawaii.edu/pbcp

ISLAND BUSINESS MAGAZINE TAKES TOP NATIONAL AWARD

Island Business magazine was honored in Washington, D.C. recently winning 2nd place nationally for Best Feature Article in the Association of Area Business Publications (AABP) 1999 Editorial Excellence Award competition for its "Healthcare Time Bomb" article. Accepting the award from AABP President Matt Toledo is Island Business Editor Lucy Jokiel. Publisher is Mary Winpenny. SBH members receive complimentary subscriptions to the award-winning monthly business publication.

HAWAII BUSINESS COLLEGE SCHOLARSHIP AVAILABLE

Hawaii Business College has announced a Back to School Scholarship that will award ten (10) $1,000.00 scholarships to qualified applicants. This scholarship was created to aid those individuals who: 1) are interested in pursuing a career in business; 2) are interested in obtaining a business education that will help them re-enter the job market or advance their current career; and 3) are in need of financial aid.

The Back to School Scholarship will be awarded to individuals for enrollment as a full-time student in a diploma or associate degree program at Hawaii Business College.

Hawaii Business College is a private post-secondary educational institution offering Associate Degrees in Business Administration, Computer Networking/Applications, Computer Applications/Accounting, and Travel and Tourism Industry. Other programs include: Diploma, Certificate, and non-credit Professional Skills courses. Additional information on program offerings can be received by calling the school at 524-4014, faxing to 524-0284, e-mailing to admin@hbc.edu, or visiting their website: http://www.hbc.edu, or by writing to : Hawaii Business College, 33 South King Street, 4th floor, Honolulu, Hawaii 96813.