Amended in Senate May 9, 2013

Amended in Senate April 8, 2013

Senate Bill No. 610

Introduced by Senator Jackson

February 22, 2013

An act to add Article 2.5 (commencing with Section 20016) to Chapter 5.5 of Division 8 of the Business and Professions Code, relating to franchises.

LEGISLATIVE COUNSEL’S DIGEST

SB 610, as amended, 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 franchisee to bring an action against a franchisor or subfranchisor who offers to sell, sells, fails to renew or transfer, or terminates a franchise in violation of these provisions for damages caused thereby, or for rescission or other relief deemed appropriate by the court. This bill would additionally authorize a court in its discretion begin delete to increase the award of damages to an amount not to exceed 3 times the actual damages sustained and end delete to award reasonable costs and attorney’s fees to a prevailing plaintiff. 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:

SECTION 1.  

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 or Subfranchisor
and Franchisees

 

20016.  

Without limiting the other provisions of this chapter,
the following specific rights and prohibitions shall govern the
relations between a franchisor, subfranchisor, and franchisee:

(a) (1) These parties shall deal with each other in good faith in
the performance and enforcement of the franchise agreement.

(2) “Good faith” for purposes of this subdivision means honesty
in fact and the observance of reasonable commercial standards of
fair dealing in the trade.

(b) A franchisor or subfranchisor shall not 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.

20017.  

(a) A franchisee may bring an action against a
franchisor or subfranchisor who offers to sell, sells, fails to renew
or transfer, or terminates a franchise in violation of Section 20016
for damages caused thereby, or for rescission or other relief deemed
appropriate by the court. In addition, the court may in its discretion
begin delete increase the award of damages to an amount not to exceed three
times the actual damages sustained and may end delete award reasonable
costs and attorney’s fees to a prevailing plaintiff.

(b) A franchisor or subfranchisor who becomes liable to make
payments under this section may recover contributions from any
person who, if sued separately, would have been liable to make
the same payments.