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effectiveness from the franchisee side

AB 525 was Sponsored by CFA because it was about protecting franchisees.  I think the interest in this question is to ask about effectiveness from the franchisee side.  This law was clearly about protection for franchisees from unscrupulous franchisors.  A key element was to protect against unlawful terminations.  For example:

"good cause shall be limited to the failure of the franchisee to substantially comply with the lawful requirements imposed upon the franchisee"

From your comments it is clear that this hasn't stunted the sales of franchises.  So the question remains, has it helped the franchisees?  

Evidence already shows CA franchise protection law effective

Visitor: "Has franchising in California been strengthened?"

There was not a "franchising" law passed in California in 2015. It was a franchise / small business protection law. Franchising is more of a concern to franchisors and more of a peripheral function for franchisees, that is to say what you are really asking is has the number of franchises sold in California increased.

Answer for franchisors: Yes. It has. Among the 50 states, California was tops in 2015 for franchise unit sales growth. In fact, gross domestic product growth in general. The 2016 economic statistics will come out later this year.

The more pertinent question that our mystery visitor from the franchisor side should have asked is --have franchises in California been strengthened?

There already is case law to show evidence that it has been strengthened.

Les Payne

Is the 2015 California franchising law update effective?

It would be interesting to see examples if how new additions to California franchise law enacted under AB 525 have resulted in further protection of franchisees' interests.

Are there any court cases which have used the new provisions to successfully protect franchisees?

Have franchisors modified their franchise agreements as a result of the new law?

Has franchising in California been strengthened?

It looks like IFA should support FL due to CA law

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Matthew Haller, 202-662-0770
Jenna Weisbord, 202-662-0766


International Franchise Association and Coalition of Franchisee Associations Find Common Ground on Contract Law to Keep Franchising a Viable Job Creator in California

SACRAMENTO, July 14, 2015 – The International Franchise Association and the Coalition of Franchisee Associations (CFA) today announced they have worked together to find agreement on several amendments to Assembly Bill 525 (Holden) that would help to ensure that franchising remains an important part of the California economy.

While maintaining the integrity of existing franchise law, the planned amendments are intended to clarify a number of issues designed to protect the rights of both franchisors and franchisees, according to representatives from both organizations.

Once amended, AB 525 will serve to update and modify language to address concerns of some franchisees regarding such matters as termination, compensation, transfer and renewal of franchises. Sponsored by CFA, AB 525 also preserves the overall framework of franchise law so that franchisors retain the ability to enforce uniform quality standards and protect brand integrity for consumers.

In a joint letter issued today to Speaker Toni Atkins and Assemblyman Chris Holden, the author of AB 525, IFA and CFA wrote they were “pleased to inform you that we have resolved our outstanding issues and reached an agreement on AB 525. After many weeks of negotiations, and with the diligent work of both sides heeding the request in Governor Brown’s veto message on SB 610 last year, the parties have agreed to new amending language for AB 525 that will remove IFA’s opposition to the legislation. While neither organization is fully pleased with the bill's substance, both IFA and CFA made significant concessions in a good faith effort to reach a workable common-sense compromise.”

IFA and CFA also conveyed the importance of adopting the amendments without interference from any non-stakeholder groups, writing: “As two of the leading national organizations that actually represent the interests of franchised businesses, we truly believe that this bill will further strengthen franchising as an engine for economic opportunity in California as franchising continues to outpace growth of the overall U.S. economy.”

AB 525 will allow franchising to remain a vibrant and important pillar of the state’s economy, the groups said. IFA and CFA, representing California franchises, employ nearly one million workers, generating in excess of $94 billion in economic output at 82,000 locations.

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