The California Franchise Relations Act sets forth certain requirements relating to the termination, nonrenewal, and transfer of franchises between a franchisor, subfranchisor, and franchisee, as those terms are defined.
This bill would require a franchisor and its affiliated companies, within 120 days of the end of the franchisor’s fiscal accounting year, to report to its California franchisees, upon their request, any moneys, goods, services, anything of value, or any other benefit from any other entity with whom the franchisee does business on account of that business.
Existing law, the Franchise Investment Law, requires a franchisor to register with the Department of Financial Protection and Innovation before the offer or sale of a franchise in this state, unless the franchisor meets prescribed
requirements, including that the franchisor discloses specified terms and conditions of the franchise agreement to a prospective franchisee and provides a copy of the typical franchise agreement in this state. Existing law prohibits specified fraudulent or unfair practices and makes a violation of those provisions a crime.
This bill would prohibit a franchisor from executing an agreement that requires the assignment or waiver of a franchisee’s right to a rebate, promotion, allowance, or other monetary incentive for the sale of a product within the state unless the agreement states the potential or current gross value of that right. The bill would specify that violation of this provision is not a crime.