Franchisee-Friendly Bill Clears California Senate

Senate Bill 610, which provides statutory relief for franchisees when franchisors act in bad faith, has cleared the California senate and will now move on to a vote …

Senate Bill 610, which provides statutory relief for franchisees when franchisors act in bad faith, has cleared the California senate and will now move on to a vote in the state assembly, where experts say it will face a much tougher fight. California franchisees are hopeful, though, and have rallied around the bill’s passage. Lawmakers advocating for the bill spoke of the need for freedom of association and enforcement of fair dealing between franchisees and the more powerful franchisors. The International Franchise Association lobbied vigorously to kill the bill, and will likely mount an even tougher attack prior to the assembly vote. For more on this continue reading the following article from Blue MauMau.

California’s senate this afternoon passed Senate Bill 610, which aims to strengthen good faith in franchising. Twenty-two senators voted in favor and twelve against. It now goes to the state assembly, and then finally will travel to Governor Jerry Brown’s desk to become law.

The good faith in franchising bill was authored by Senator Hannah-Beth Jackson (D-Santa Barbara) in February and passed by the Judiciary Committee in April. "Right now, virtually all power in these business relationships rest with the franchisor," said Senator Jackson in introducing the need for the bill to fellow senators.

The bill’s passage is encouraging to franchisee advocates.

"This is the best opportunity in years to have major franchisee protection legislation enacted to protect the vital interests of franchise owners," said Robert Purvin, chair of the 20-year-old American Association of Franchisees and Dealers, which co-sponsored the bill. "An affirmative right of good faith and fair dealing, and a statutory right to recover damages when franchisors act in bad faith, will provide significant protection to California franchise owners," adds Purvin.

Senator Ted Gaines (R-El Dorado Hills) and Bill Emmerson (R-Redding) were the two Republicans who voted for the bill.

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Senator Gaines, who is listed on the California Small Business Association’s honor roll, spoke on the senate floor for the need to vote for Senate Bill 610. "Freedom of association is critical when you are in business because you want to speak with your peers to proceed in a business fashion," he stated to his fellow senators. "I’m an independent insurance agent and we have an association of agents that meet on a regular basis. We try to negotiate with the insurance companies that we represent."

The International Franchise Association, which was founded in 1960 to lobby for franchisors, has put considerable effort in California to stop the franchisee-friendly bill. The passage of the bill is evidence that the small business owners and their associations are learning how to work with other groups and to lobby against the might of franchisors and big businesses.

Many California franchisees contacted their representatives. Some were even able to testify during committee hearings.

"Thanks to everyone who supported this effort," emailed Keith Miller, a Sacramento native and chair of the D.C.-based Coalition of Franchisee Associations, to franchisees and leaders of large franchisee groups who wrote their state senators to support the bill.

"This can only make the franchise industry stronger for everyone involved," wrote Kathryn Slater-Carter, who sponsored the bill. Although not a franchisee, she has seen generations of her family involved in McDonald’s franchises. She hopes franchising will be better for her children.

Although the bill was no easy walk through the Senate, franchisees anticipate that the state assembly could be even tougher.

"I look forward to support from the over 80,000 franchisees in California as this moves forward into the Assembly," states Kathryn Slater-Carter, who thinks the number of supporting franchisees have favorably impacted lawmakers.

"Much work remains," wrote franchisee Miller to fellow supporters.

But franchisees and their advocates are hopeful.

"If passed, California law will require that franchisors act fairly and in good faith when enforcing one-sided franchise agreements," summarizes the AAFD’s Purvin.

This article was republished with permission from Blue MauMau.


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