Today's Law As Amended

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AB-2637 Franchise investments: offer and sale of registered franchises: registration exemption.(2015-2016)

As Amends the Law Today


 Section 31109.1 of the Corporations Code is amended to read:

 (a) There shall be exempted from the provisions of Chapter 2 (commencing with Section 31110) the offer and  sale of a franchise registered under Section 31111, 31121, or 31123 on terms different from the terms of the offer registered thereunder if all of the following requirements are met:
(1) The initial offer is the offer registered under Section 31111, 31121, or 31123.
(2) The prospective franchisee receives all of the following in a separate written appendix to the franchise disclosure document: cover page, a state cover page, or a state addendum of the disclosure document specifically states, “You and the franchisor may agree to sign the forms of franchise agreement and other agreements attached to this disclosure document. However, California law does not prohibit you and the franchisor from negotiating changes to the franchise agreement and other agreements, nor does it require you or the franchisor to negotiate any changes.” 
(A) A summary description of each material negotiated term that was negotiated by the franchisor for a California franchise during the 12-month period ending in the calendar month immediately preceding the month in which the negotiated offer or sale is made under this section.
(B) A statement indicating that copies of the negotiated terms are available upon written request.
(C) The name, telephone number, and address of the representative of the franchisor to whom requests for a copy of the negotiated terms may be obtained.
(3) The franchisor certifies or declares in an appendix to its application for renewal that it has complied with all of the requirements of this section, in the event this exemption is claimed.
(4) The negotiated terms, on the whole, confer additional benefits on the franchisee.
(b) The franchisor shall provide a copy of the negotiated terms described in subdivision (a) to the prospective franchisee within five business days following the request of the franchisee.
(c) (b)  The franchisor shall maintain copies of all material negotiated terms for which this exemption is claimed for a period of five years from the effective date of the first  agreement containing the relevant negotiated term. Upon the request of the commissioner, the franchisor shall make the copies available to the commissioner for review. For purposes of this section, the commissioner may prescribe by rule or order the format and content of the summary description of the negotiated terms required by subparagraph (A) of paragraph (2) of subdivision (a). 
(d) (c)  For purposes of this section, “material” means that a reasonable franchisee would view the terms as important in negotiating the franchise.