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Log In / Register | Jul 16, 2018

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Keith Miller's picture

Transfers and California Law

Regarding the last case again, Raheel Foods, LLC v. Yum! Brands, Inc., when we passed AB-525 in California in 2015, we specifically tried to tackle the issue of a franchisor not approving a transfer, but then selling a new franchise to a prospective franchisee.  And the approval standard must be supplied in writing to the franchisee.  California language is below.

 (a) It is unlawful for a franchisor to prevent a franchisee from selling or transferring a franchise, all or substantially all of the assets of the franchise business, or a controlling or noncontrolling interest in the franchise business, to another person provided that the person is qualified under the franchisor’s then-existing standards for the approval of new or renewing franchisees, these standards to be made available to the franchisee, as provided in Section 20029, and to be consistently applied to similarly situated franchisees operating within the franchise brand, and the franchisee and the buyer, transferee, or assignee comply with the transfer conditions specified in the franchise agreement.

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