California Mulls New Franchise Bill

Proponents of California Senate Bill 610 say that it’s a necessary step to protect the precepts of good faith and fair dealing between franchisors and franchisees, while opponents …

Proponents of California Senate Bill 610 say that it’s a necessary step to protect the precepts of good faith and fair dealing between franchisors and franchisees, while opponents at the International Franchise Association argue it will give franchisee attorneys more latitude to enter into frivolous and costly lawsuits against franchisors. Prior to considering the bill, lawmakers heard from several franchise owners who told tales of woe about franchisors that change the rules on the fly to maximize profits and marginalize liability. For more on this continue reading the following article from Blue MauMau.  

California state senators listened to franchise owners and associations ask for passage of Senate Bill 610 yesterday. Authored by Senator Hannah-Beth Jackson [D-Santa Barbara], the bill was crafted to bolster good faith in a franchisor’s dealings with franchisees and the right to associate without fear of reprisal.

In the attached audio file of the hearing, remarks by participants are typically targeted towards Senator Noreen Evans [D-Santa Rosa], chair of the Judiciary Committee. Senator Jackson is the first voice to be heard as she introduces the bill to members of the Judiciary Committee.

Listen to the full hearing of Senate Bill 610 below by clicking on the triangle next to the speaker icon (flash needed) or download the mp3 audio file. (21:23 minutes)

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In support of the bill, McDonald’s franchisee Katherine Slater Carter is the first to tell her story on how brand standards can be arbitrarily changed on the spot by a franchisor to obtain what it wants. Bill sponsor Robert Purvin, chair of the American Association of Franchisees and Dealers, followed. "All we are asking for in this bill is the opportunity for franchisees to protect the right of good faith and fair dealing," states Purvin. "This is a very pro-franchising bill," he adds.

A former Cold Stone Creamery franchise owner also tells his story about how his franchisor wants him to pay future royalties from his insolvent and shuttered ice cream shop as if he were still in business. He is then followed by Amin Salkhi, who represents some 10,000 service station franchisees. Ali Mazarei gave support of the bill on behalf of the Paris Chamber of Commerce. Franchisee Keith Miller, chair of the Coalition of Franchisee Associations and San Rafael-based franchisee attorney Peter Lagarias also spoke about the need for the bill.

Lobbying against the bill was the International Franchise Association’s Dean Heyl, director of  the IFA’s state government relations. Heyl stated the bill will reward plaintiff’s (franchisee’s) attorneys through increased litigation and "will harm California’s already fragile economy."

The bill passed the state senate’s Judicial Committee yesterday afternoon by a vote of 5 to 2. Despite strong lobbying against it, the bill is likely to pass on the floor of the senate in the next few weeks. However, it is anticipated to see strong opposition in the assembly.

This article was republished with permission from Blue MauMau.


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