Heads turn as eighty current franchisees simultaneously get up to testify

SACRAMENTO — California's fair franchising bill passed the judiciary committee at roughly 1 p.m. Pacific Time.  Assembly bill 2305 now goes to the Business, Professions and Consumer Protections committee on April 24 and then, if approved, it will go to the floor of the assembly for a vote.

"This bill can be improved and will be improved," said the bill's author, California Assemblymember Jared Huffman (D-San Rafael), in response to some state lawmakers that felt the bill was a little too sweeping in curbing abusive franchisor practices. One of the clauses has the appearance of allowing perpetual renewal of franchise contracts for small business franchise owners, which concerns franchisors and some lawmakers.

The initial bill passed with six Democratic votes in favor (Mike Feuer, Luis Alejo, Toni Atkins, Roger Dickinson, Bill Monning and Bob Wieckowski) and three Republican votes in block against it (Don Wagner, Jeff Gorell and Brian Jones). There was one abstention by Democrat Alyson Huber.

"Franchisors have uniformly put in language to effectively waive the statutes," said Bay-area attorney Peter Lagarias. The attorney pointed out that there are considerable abuses among franchisors.

"Remember, it is the franchisee that pays local and state taxes, hires the local work force, supports the local youth leagues and represents the brand to the community," added franchisee Keith Miller. Addressing a full room, the head of the Coalition of Franchisee Associations stressed that he was a sandwich maker. Attorney testimonies of other bills had filled the morning session.

Existing franchise owners from such colossal brands as McDonald's, Subway, 7-Eleven, Holiday Inn, AMPM, and many more thronged the hearing room. When asked who in the audience supported the bill, the room came to life. There was an audible pause and then a giggle when some 80 current franchise owners simultaneously lined up to state who they were and their support for the bill. Even Marriott, which has an image of an employee-friendly place, had franchisees there to testify of lopsided franchise agreements that entrapped.

Members of the Asian American Hotel Owners Association came out in force. Miller stressed that today's showing was but a small part of the many franchise owners who were not able to make it but who wanted this bill to be approved.

But law firm DLA Piper, which was one of the early pioneers of writing today's franchise agreements, opposed the bill. Representing the International Franchise Association, DLA Piper warned that franchisors might stop selling franchise licenses to Californians if this bill passed. It also declared that franchise lawsuits and complaints have been down these past five years so there was no need for new laws.

The California Chamber of Commerce, which lobbied various positions in the hearing for a number of other bills, said it opposed the fair franchising bill. It felt the Level Playing Field for Small Businesses Act was unnecessary. It also objected to earlier statements that franchise agreements were lopsided towards franchisors.

Keith Miller, chair of a group that represents franchise owners from some of America's largest brands, declared, "I am shocked to see the Chamber, who allegedly represents small business, in opposition to this bill. To be sure, local small businesses are here today to tell you themselves [that they support this bill]." Miller has franchises around Sacramento, where he lives. He and his group, along with the Asian American Hotel Owners Association, had worked behind the scenes to help get the bill passed.