California Franchise Relations Act

International franchisors inbound into the U.S. face a complex set of business decisions and legal regulations.  Even seemingly simple tasks–like properly executing a franchise registration application–can become a time-consuming and expensive endeavor (especially where the franchisor does not have an authorized signatory in the U.S.).  Knowing how and when to request waivers can save time

41235506_sYou’ve developed the concept.  You’ve protected the IP.  You’ve invested in the many upfront costs of franchising.  And to protect all your hard work, you conduct due diligence to find the best franchisees.

And if that franchisee wants to sell the franchise to a stranger, you should have almost unlimited veto power, right?  Not so

© 2005 iStockphoto LP. All rights reserved.Finding the right franchisee can be a daunting task.  Despite a franchisor’s best efforts, sometimes a franchisee just isn’t a good fit.  When it’s not working out, franchisors rely on termination and non-renewal provisions in their franchise agreements to legally end the relationship.

In addition to this business reality, recent amendments to California’s Franchise Relations

So, your franchise agreement has an airtight arbitration provision…right?  It probably says that if any disputes arise out of your franchise agreement, then they must be arbitrated (rather than litigated).  But what happens when creative plaintiff’s counsel argues that the arbitration provision itself is unenforceable?  Does your arbitration provision require that question to be arbitrated?

On April 16, 2013, the California Senate Judiciary Committee, voting along party lines 5 to 2, reported Senate Bill No. 610 (pdf) out of committee to the California Senate Floor.

This bill would amend the California Franchise Relations Act to add certain provisions to the Act.  The original Act was enacted to govern the relationships between

Contributed by Tom Kent

Legislation has been introduced in California that would significantly expand the protections afforded to franchisees under California’s Franchise Relations Act and California’s Franchise Investment Law. Assembly Bill No. 2305 known as “The Level Playing Field For Small Business Act of 2012” should be grabbing the attention of the franchise community, if it hasn’t already. Section