Franchisees and franchisors reach a deal in California

Franchise operators and franchisors reached a deal Tuesday on pending California legislation aimed to extend the rights of chain-restaurant franchisees.

The compromise between the International Franchise Association and the Coalition of Franchisee Associations resulted in a joint proposal to amend Assembly Bill 525, which seeks to give franchisees greater protection from what some consider predatory practices on the part of franchisors. The proposed amendments would protect the rights of both franchisors and franchisees, according to representatives from both groups, thus terminating the IFA’s opposition to the current bill and potentially increasing its likelihood of becoming law.

“As two of the leading national organizations that actually represent the interests of franchised businesses, we truly believe that this bill will further strengthen franchising as an engine for economic opportunity in California as franchising continues to outpace growth of the overall U.S. economy,” the IFA and CFA wrote in a joint letter to Assembly Speaker Toni Atkins (D-San Diego) and bill author Assemblyman Chris Holden (D-Pasadena).

California Governor Jerry Brown vetoed similar legislation last August, citing unclear language and the fact that the tougher standards for terminating franchisees were “untested.”


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