Vetoed by Governor Jerry Brown, Jr.

Vote Smart's Synopsis:

Vote to concur with House amendments and pass a bill that amends the terms and privileges granted in a franchise agreement.

Highlights:

• Prohibits a franchise agreement from restricting the franchisee in the following ways (Sec. 2):
• From joining or participating in an association of franchisees; and
• From selling or transferring a franchise or part of the interest of the franchise to a “qualified” individual with the consent of the franchisor.

• Requires a franchise agreement to prohibit a franchisor from “unreasonably” disapproving a sale or transfer of a franchise and from withholding the reasons for the disapproval (Sec. 2).

• Prohibits a franchisor from terminating a franchise prior to the expiration of the franchise’s term unless the following events have occurred (Sec. 3):
• The franchisee has allowed a “substantial and material breach” of a lawful requirement of the franchise agreement to occur; and
• The franchisee has been given at least 30 days to amend the problem.

• Requires a franchisor to reinstate a franchise and pay all damages caused to the franchisee if the franchisor terminates or fails to allow the sale, transfer, or assignment of a franchise, unless the terms for doing so are in accordance with this bill (Sec. 4).

• Requires a franchisor to offer to repurchase a franchisee’s resalable current inventory if the franchisor fails to renew a franchise, unless the terms of non-renewal are in accordance with this bill (Sec. 4).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that amends the terms and privileges granted in a franchise agreement.

Highlights:

• Prohibits a franchise agreement from restricting the franchisee in the following ways (Sec. 2):
• From joining or participating in an association of franchisees; and
• From selling or transferring a franchise or part of the interest of the franchise to a “qualified” individual with the consent of the franchisor.

• Requires a franchise agreement to prohibit a franchisor from “unreasonably” disapproving a sale or transfer of a franchise and from withholding the reasons for the disapproval (Sec. 2).

• Prohibits a franchisor from terminating a franchise prior to the expiration of the franchise’s term unless the following events have occurred (Sec. 3):
• The franchisee has allowed a “substantial and material breach” of a lawful requirement of the franchise agreement to occur; and
• The franchisee has been given at least 30 days to amend the problem.

• Requires a franchisor to reinstate a franchise and pay all damages caused to the franchisee if the franchisor terminates or fails to allow the sale, transfer, or assignment of a franchise, unless the terms for doing so are in accordance with this bill (Sec. 4).

• Requires a franchisor to offer to repurchase a franchisee’s resalable current inventory if the franchisor fails to renew a franchise, unless the terms of non-renewal are in accordance with this bill (Sec. 4).

Full Bill Text