Today's Law As Amended

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SB-610 Franchises.(2013-2014)



SECTION 1.

 Section 20010 of the Business and Professions Code is amended to read:

20010.
 Any condition, stipulation stipulation,  or provision purporting to bind any person to waive compliance with any provision of this law or to waive the implied covenant of good faith and fair dealing  is contrary to public policy and void.

SEC. 2.

 Article 2.5 (commencing with Section 20016) is added to Chapter 5.5 of Division 8 of the Business and Professions Code, to read:

Article  2.5. Relationships Between Franchisor and Franchisees
20016.
 It is unlawful for a franchise agreement to do any of the following:
(a) Restrict the right of a franchisee to join or participate in an association of franchisees to the extent the restriction is prohibited by Section 31220 of the Corporations Code.
(b) (1) Prevent a franchisee from selling or transferring a franchise or a part of the interest of a franchise to another person, provided the person is qualified. A franchisee shall not, however, have the right to sell, transfer, or assign the franchise, or a right thereunder, without the consent of the franchisor except that the consent shall not be unreasonably withheld.
(2) (A) Allow the transferring franchisee to fail, prior to the sale, transfer, or assignment of a franchise or the sale, assignment, or transfer of all, or substantially all, of the assets of the franchised business or a controlling interest in the franchised business to another person, to notify the franchisor of the franchisee’s decision to sell, transfer, or assign the franchise. The notice shall be in writing and shall include all of the following:
(i) The proposed transferee’s name and address.
(ii) A copy of all of the agreements relating to the sale, assignment, or transfer of the franchised business or its assets.
(iii) The proposed transferee’s application for approval to become the successor franchisee. The application shall include forms and related information generally utilized by the franchisor in reviewing prospective franchisees, if those forms are readily made available to existing franchisees. As soon as practicable after receipt of the proposed transferee’s application, the franchisor shall notify the franchisee and the proposed transferee of information needed to make the application complete.
(B) For the franchisor, to fail, on or before 60 days after the receipt of all of the information required pursuant to subparagraph (A), or as extended by a written agreement between the franchisor and the franchisee, to notify the franchisee of the approval or the disapproval of the sale, transfer, or assignment of the franchise. The notice shall be in writing and shall be personally served or sent by certified mail, return receipt requested, or by guaranteed overnight delivery service that provides verification of delivery and shall be directed to the franchisee. A proposed sale, assignment, or transfer shall be deemed approved, unless disapproved by the franchisor in the manner provided by this subdivision. If the proposed sale, assignment, or transfer is disapproved, the franchisor shall include in the notice of disapproval a statement setting forth the reasons for the disapproval.
(3) In an action in which the franchisor’s withholding of consent under this subdivision is an issue, whether the withholding of consent was unreasonable is a question of fact requiring consideration of all the existing circumstances.

SEC. 3.

 Section 20020 of the Business and Professions Code is amended to read:

20020.
 Except as otherwise provided by this chapter, no a  franchisor may  shall not  terminate a franchise prior to the expiration of its term, except for good cause. Except as provided in Section 20021, good cause shall be limited to the failure upon a substantial and material breach on the part  of the franchisee to substantially comply with the lawful requirements imposed upon the franchisee by the franchise agreement after being given notice at least 60 days in advance of the termination and a reasonable opportunity, which in no event shall be less than 60 days from the date of the notice of noncompliance, to cure the failure. The period to exercise the right to cure shall not exceed 75 days unless there is a separate agreement between the franchisor and franchisee to extend the time. of a lawful requirement of the franchise agreement. If there is a substantial and material breach of a lawful requirement of the franchise agreement, the franchisor shall allow the franchisee 30 days to cure the failure before termination. 

SEC. 4.

 Section 20035 of the Business and Professions Code is amended to read:

20035.
 (a) In the event a franchisor terminates or fails to renew a franchisee, in violation  allow the sale, transfer, or assignment of a franchise other than in accordance with the provisions  of this chapter, the franchisee shall be entitled to receive from the franchisor franchisor shall reinstate the franchisee in accordance with the provisions of this chapter and shall pay all damages caused thereby, or, at the election of the franchisee, shall pay to the franchisee  the fair market value of the franchised business and franchise assets and any other damages caused by the violation  franchise and franchise assets. A court shall be entitled to grant preliminary and permanent injunctions for violations  of this chapter.
(b) A court may grant preliminary and permanent injunctions for a violation or threatened violation of this chapter. In the event a franchisor fails to renew a franchise other than in accordance with the provisions of this chapter, the franchisor shall offer to repurchase from the franchisee the franchisee’s resalable current inventory meeting the franchisor’s present standards that is required by the franchise agreement or commercial practice and held for use or sale in the franchised business at the lower of the fair wholesale market value or the price paid by the franchisee. The franchisor shall not be liable for offering to purchase personalized items that have no value to the franchisor in the business that it franchises.