SB610, approved by California’s assembly earlier this month, was given final approval by the California senate late last week in a vote of 23-9 and sent to Governor Jerry Brown for signature to become law.

Copyright: ambientideas / 123RF Stock Photo
Copyright: ambientideas / 123RF Stock Photo

As we reported shortly after SB610’s approval by California’s assembly, the bill will amend the California Franchise Relations Act (Act) to make it more difficult for franchisors to terminate or fail to renew franchisees.  If signed into law by the Governor,  the Act will be amended to make it unlawful for a franchise agreement to:

  1. restrict the right of a franchisee to join a franchisee association;
  2. prohibit a franchisee from transferring a franchise to a qualified person or allow a franchisor to unreasonably withhold consent to a transfer;
  3. terminate a franchisee prior to the expiration of its term, except upon a substantial and material breach on the part of the franchisee of a lawful requirement of the franchise agreement; and
  4. terminate a franchisee for a  substantial and material breach without allowing 30 days to cure the breach.

SB610 is strongly opposed by the International Franchise Association which argues that approval of the bill will result in less individually owned franchises and more company-owned outlets in California.  You can read the statement issued  by the IFA after the bill’s passage here.  The bill was sponsored by the Southern California-based American Association of Franchisees and Dealers and supported by franchisees and labor unions such as the Service Employees International Union (SEIU) who argues that a shift in power to individual franchise owners will ultimately help workers.