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California Senate Bill SB-610, a piece of fair franchising legislation sponsored by the American Association of Franchisees and Dealers (AAFD), goes before the California Assembly Committee on Business, Professions and Consumer Protection on Tuesday morning, June 24, 2014. As the AAFD Chairman, I have been asked to testify in support of the bill at the upcoming hearings. This is a critical time for California franchisees to demonstrate support for this important legislation by sending letters to Committee members and attending the Committee hearing.
SB-610, introduced by Senator Hannah-Beth Jackson (D-Dist 19), seeks to protect the duty of good faith and fair dealing in franchise relationships and reinforce the right of franchisees to join and participate in franchisee associations. The bill also provides protections of franchisee rights with regard to franchise sales, transfers and terminations.
The Bill is supported by a coalition of franchise associations and other organizations that back consumer protection legislation. Joining the AAFD is the Coalition of Franchise Associations (CFA), the Asian American Hotel Owners Association (AAHOA), Change to Win, among others, with significant leadership from John Gordon of Pacific Management Consulting Group.
The Bill is opposed by the International Franchise Association and other associations that represent big business, including the California Chamber of Commerce.
The AAFD has issued a statement in support of the bill, which states in part:
Modern franchise relationships are most always governed by one-sided 'take it or leave it' adhesion contracts that elicit substantial monetary investment from franchise owners, but severely limit a franchisee's rights in the franchise relationship. For franchisees, the franchise relationship is almost always a 'bet the farm' transaction whereby most franchise owners place their business and financial futures on the line in reliance on the strength of a brand and a franchisor's promise of substantial support.
SB-610, as amended in 2014, takes a small but important step in recognizing and protecting franchisee rights. Most importantly, the statute would prohibit a franchisor from attempting to waive the duty of good faith implied in all agreements. The Bill also provides important protection of franchisee rights and interests in the event of the sale and/or termination of the franchise. Long term, the Bill protects the best opportunity to create a level playing field in franchise relationships by protecting the right of effective franchisee associations with leverage to negotiate franchise agreements and relationships that respect the legitimate interests of both franchisors and franchisees.
Franchisees who want to contact the Assembly Committee on Business, Professions and Consumer Protection can visit the Committee web page to find the contact info.
More information on SB-610 is available on the California bill information web page.
Franchisees may also attend the Assembly Committee Hearings in Sacramento on Tuesday, June 24, 2014, 8:30 a.m., 4th Floor, State Capitol Room 447.
Note: This article is a modification from a letter that was emailed out to AAFD members and contacts on Monday.
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