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The American Association of Franchisees and Dealers (AAFD) has signed on as a co-sponsor of California Senate Bill SB610, fair franchising legislation pending in the California legislature. I have been asked to testify in support of the bill at upcoming Senate Judiciary Committee hearings scheduled for Tuesday, April 16.
SB610, introduced by Senator Hannah-Beth Jackson (D-Dist 19), would create an affirmative 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 franchisees the right to sue if they believe their franchisor has not acted in good faith with regard to franchise sales, renewals, transfers and terminations.
Although the AAFD was not involved with drafting SB 610, the association has supported the legislation and announced its endorsement of the bill in late March. I have been invited to testify on behalf of the proponents of the bill, and the AAFD agreed to sign on as a co-sponsor of the bill with Senator Jackson.
Modern franchise relationships are most always governed by one-sided ‘take it or leave it’ adhesion contracts that require a significant financial investment from franchise owners but severely limit a franchisee’s rights in the franchise relationship. Creating a statutory affirmative duty of good faith in franchise relationships will inhibit the enforcement of one-sided franchise agreements in an abusive manner. Long term, the best opportunity to create a level playing field in franchise relationships is too encourage effective franchisee associations with sufficient leverage to negotiate franchise agreements and relationships that respect the legitimate interests of both franchisors and franchisees. The two prongs of Senate Bill 610 and the included remedies for violations will provide significant safeguards against abuse in franchise relationships.
The AAFD has also suggested amendments to bill designed to extend the ability of franchisee associations to act on behalf of their members to enforce the protections provided in the legislation.
The bill is being strongly opposed by the International Franchise Association and other associations that represent big business (such as the California Chamber of Commerce). If franchise owners desire to assure fair treatment in their franchise relationships it is essential that they show support for this legislation. California franchisees are especially encouraged to voice their support for SB 610.
To attend the Senate Judiciary Committee Hearings to show your support: Tuesday, April 16, 2013, 1:30 p.m., State Capitol Room 112.