SB 610, as introduced, Jackson. Franchises.
The California Franchise Relations Act sets forth certain requirements related to the termination, nonrenewal, and transfer of franchises between a franchisor, subfranchisor, and franchisee, as those terms are defined.
This bill would require these parties to deal with each other in good faith, as defined, and prohibit a franchisor or subfranchisor from restricting the right of a franchisee to join or participate in an association of franchisees to the extent the restriction is prohibited by existing law. This bill would authorize a civil action for a violation of these provisions that includes, but is not limited to, rescission and an award of costs, reasonable attorney’s fees, and treble damages. This bill would also authorize a franchisor or subfranchisor who becomes liable to make payments for a violation of these provisions to recover contributions from any person who, if sued separately, would also have been liable to make the same payments.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Article 2.5 (commencing with Section 20016) is
2added to Chapter 5.5 of Division 8 of the Business and Professions
3Code, to read:
4
Without limiting the other provisions of this chapter,
9the following specific rights and prohibitions shall govern the
10relations between a franchisor, subfranchisor, and franchisee:
11(a) (1) These parties shall deal with each other in good faith in
12the performance and enforcement of the franchise agreement.
13(2) “Good faith” for purposes of this subdivision means honesty
14in fact and the observance of reasonable commercial standards of
15fair dealing in the trade.
16(b) A franchisor or subfranchisor shall not restrict the right of
17a franchisee to join or participate in an association of franchisees
18to the extent the
restriction is prohibited by Section 31220 of the
19Corporations Code.
(a) A franchisor or subfranchisor who offers to sell,
21sells, fails to renew or transfer, or terminates a franchise in
22violation of Section 20016 shall be liable to the subfranchisor or
23franchisee, who may sue for damages caused thereby or for
24rescission or other relief as the court may deem appropriate.
25(b) The suit authorized pursuant to this section may be brought
26to recover the actual damages sustained by the plaintiff together
27with the cost of the suit, including reasonable attorney’s fees, and
28the court may in its discretion increase the award of damages to
29an amount not to exceed three times the actual damages sustained.
30(c) A franchisor or subfranchisor who becomes liable
to make
31payments under this section may recover contributions from any
32person who, if sued separately, would have been liable to make
33the same payments.
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