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New Bill Extends Protections For California Franchisees

Written by Ken Gaebler
Published: 3/7/2012

Legislation in the California State Assembly would offer the state's franchisees a slate of new protections and expand their rights under state law.

For years, California franchisees and franchisee advocates have been bothered by a wide range of issues related to franchising in the Golden State. Now, new legislation currently before the state assembly may resolve at least some of these issues and provide greater protection for franchisees.

California Franchising Rules

Assembly Bill 2305, a.k.a. "The Level Playing Field for Small Business Act of 2012" was introduced in the California State Assembly last week. According to Blue MauMau, the proposed legislation amends multiple provisions of the California Franchise Investment Act and the California Franchise Relations Act.

If passed, the bill will:

  • Require a good faith duty on all parties in the franchise agreement
  • Impose franchisors to shoulder a duty of competence
  • Improve protection against territorial encroachment
  • Protect franchisees against unfair terminations
  • Include franchise associations as protected organizations
  • Strengthen franchisees' right to resolve disputes locally
  • Extend statutes of limitations to four years

California is viewed to be a regulation-heavy state by many California entrepreneurs and business owners. The new California franchising bill is being sponsored by Assemblyman Jared Huffman (D-Marin California and is co-authored by Assemblyman Tom Ammiano (D-San Francisco). It is also being supported by the American Franchisee Association and the California Small Business Association.

With Democrats in control of California's legislative and executive branches, supporters are hopeful that the bill will be approved into law and serve as a model for similar legislation across the nation.

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