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Yes, better for Calif 'zees but the bill did not pass

Q: "Better?"

A: Unfortunately, the bill did not pass. It would have been helpful to California's franchise owners to give protection if a franchisor decides to set up a new store in the old franchise's backyard. It would have been helpful to have franchisors owe a duty of competence to franchisees.


Does this bill make anything better?

RichardSolomon's picture

It is not the purpose of government to clean up our mess when

we have behaved stupidly.

Why is it so difficult to understand that message?

Richard, you speak sensibly.

Grown men and women can sign or not sign anything they want. If you don't understand legal nomenclature hire an attorney.

RichardSolomon's picture

Division of spoils in marriage dissolution is the product of

male inability to resist signing anything in exchange for what he thinks is true love.

The termination of franchises is also the product of laregely (but not totally) male testosterone craziness. However, comercial contracts are not entered into By the Grace of God. Therefrore one should not expect divine justice at the day of reckoning.

The screwing you get at the end of marriage is nothing compared to the screwing you deserve and receive at the moment of dissolution of comercial agreements.

Ray Borradale's picture

It is the same situation

in Australia where the federal Code defines disclosure and does not deal with relationship law. I agree with all the comments here, although terminations on an uncontested basis might be a difficult pill for most to swollow including me.

michael webster's picture

Marriage and Franchise

Richard writes: "In free market commerce contracts are as close as you can get to sacred. Compared to the rate at which marriages are torn up, one could posit that commercial agreements are far more critical to the success of our nation as an economic model."

I agree that contracts should be treated with high deference.  

However, as far as I can see only marriage and franchising are the two institution in which we allow complete and utter bullshit to be made by either party to be complete unactionable - by common law for marriage and by the judicial interpretation of the integration clause in franchising.

Since, we now allow "terminations" of marriage to proceed largely on an uncontested basis, dividing the spoils according to statute, we should treat the end of the franchise relationship in a similar manner.

RichardSolomon's picture

For once I agree with the IFA. What has been going on in

franchising, egregious as it has been, is not a sound basis for the erosion of commercial agreements amongst consenting adults.

If there is fraud, it can already be addressed as fraud.

If the terms of contracts are too severe, people don't have to sign them.

In free market commerce contracts are as close as you can get to sacred. Compared to the rate at which marriages are torn up, one could posit that commercial agreements are far more critical to the success of our nation as an economic model.

Mr. Blue MauMau's picture

Pre-sales (federal FDD) vs post-sales (State) regulation

Post-sales franchise relationship laws

I'm hearing confusion among the ranks of franchise development sales people of what the California fair franchising bill is. Some think that California is trying to enact its own franchise disclosure document. It's not. The Federal Trade Commission already has a federal franchise rule that defines the template of the franchise disclosure document around the country. To date, there is no federal franchise relationship law.

When talking about franchise relationship laws, these are discussions of post-sales franchisor-franchisee regulation as opposed to pre-sales disclosure regulation. Of these relationship laws, the International Franchise Association makes a point that States (see chart) should NOT mess with a contract that two consulting adults have signed. But many states and franchisee groups do not see it this way. They think that there have to be limits, even with consulting adults. Many states already have these post-sale franchise laws. And each state has their own law.

Franchise attorneys, feel free to chime in. There's confusion on this issue with seasoned franchise sellers.

Related reading:

Paul Steinberg's picture

BigLaw view of CA bill

Fox Rothschild, a large law firm representing franchisors, calls the proposed legislation:

perhaps the most aggressive legislative effort to date to constrain franchisors’ contractual rights and remedies

michael webster's picture

State Strategy

The strategy of approaching states, where for various reasons, support for franchisees is strong is a good idea. Much better than hanging around Washington when your PAC might buy you lunch.  It would make rational sense for the states to be targetted based upon the franchisee associations home location.  

Each association could serve as the coordinator for the state legislation efforts.  We still aren't seeing a coordinated effort to collate, if you will, the legal results of Fair Franchise Legislation.  I think that this is a mistake.

Finally, there may be a  clear benefit to Independent Franchisee Associations:

"This bill would also make it unlawful for a franchisor to refuse to recognize and deal fairly and in good faith with an independent franchisee association".

I am unclear what the standard for "refusal to recognize" means, but there may be content to the latter part of the conjunct.  I am not sure what it is, the problem it addresses or whether it will work.

On a personal note, I see that this Bill introduces a number of new remedies for franchisees and yet makes arbitration of those remedies mandatory.  That is a shame.  

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