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In the News
California Franchising Good-Faith Legislation Moves Forward
A bill has advanced in the California Assembly that, if ultimately passed, will enhance franchisee rights in that state. SB 610, which was introduced by Senator Hannah-Beth Jackson (D-Dist 19), was approved by the Senate last year. It aims to enhance the right of franchisees to participate in associations, to regulate the sale and transfer of franchises and to enforce the duties of good faith and fair dealing in franchising agreements.
When the Bill last year failed to gain the support it now appears to have, the International Franchise Association (IFA) issued a statement about SB 610's defeat, which stated, in part: “Lawmakers in California recognized the basic tenet of the franchise model is the contract, and both franchisees and franchisors need to work to adhere to the terms of the contract for the model to thrive. Franchising remains the most viable way to own and operate a small business for many Americans, and legislators didn't want to upset the apple cart to appease a few isolated grievances when there are processes already in place within those systems, and the courts, to address them.” See, “California Legislature Rejects Attempt to Undermine Franchise Contracts.”'
Others are on board with the proposed legislation. For instance, The American Association of Franchisees and Dealers (AAFD), a California-based trade association for franchisees, issued a statement in June explaining its support. It states, in part: “Modern franchise relationships are most always governed by one-sided 'take it or leave it' adhesion contracts that elicit substantial monetary investment from franchise owners, but severely limit a franchisees rights in the franchise relationship. For franchisees, the franchise relationship is almost always a 'bet the farm' transaction whereby most franchise owners place their business and financial futures on the line in reliance on the strength of a brand and a franchisor's promise of substantial support.”
California Franchising Good-Faith Legislation Moves Forward
A bill has advanced in the California Assembly that, if ultimately passed, will enhance franchisee rights in that state. SB 610, which was introduced by Senator Hannah-Beth Jackson (D-Dist 19), was approved by the Senate last year. It aims to enhance the right of franchisees to participate in associations, to regulate the sale and transfer of franchises and to enforce the duties of good faith and fair dealing in franchising agreements.
When the Bill last year failed to gain the support it now appears to have, the International Franchise Association (IFA) issued a statement about SB 610's defeat, which stated, in part: “Lawmakers in California recognized the basic tenet of the franchise model is the contract, and both franchisees and franchisors need to work to adhere to the terms of the contract for the model to thrive. Franchising remains the most viable way to own and operate a small business for many Americans, and legislators didn't want to upset the apple cart to appease a few isolated grievances when there are processes already in place within those systems, and the courts, to address them.” See, “California Legislature Rejects Attempt to Undermine Franchise Contracts.”'
Others are on board with the proposed legislation. For instance, The American Association of Franchisees and Dealers (AAFD), a California-based trade association for franchisees, issued a statement in June explaining its support. It states, in part: “Modern franchise relationships are most always governed by one-sided 'take it or leave it' adhesion contracts that elicit substantial monetary investment from franchise owners, but severely limit a franchisees rights in the franchise relationship. For franchisees, the franchise relationship is almost always a 'bet the farm' transaction whereby most franchise owners place their business and financial futures on the line in reliance on the strength of a brand and a franchisor's promise of substantial support.”
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