BILL NUMBER: AB 1782 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 10, 2016
INTRODUCED BY Assembly Member Maienschein
FEBRUARY 4, 2016
An act to amend Section 31013 of, and to add Section 31020 to, the
Corporations Code, relating to franchises.
LEGISLATIVE COUNSEL'S DIGEST
AB 1782, as amended, Maienschein. Franchises: offer to sell: trade
show.
The Franchise Investment Law generally requires a franchisor to
register with the Department of Business Oversight before an offer or
sale of a franchise in this state and provides that a willful
violation of this law is a crime. Existing law provides, among other
things, that an offer or sale of a franchise is made in this state
when an offer to sell is made in this state, or an offer to buy is
accepted in this state, or, if the franchisee is domiciled in this
state, the franchised business is or will be operated in this state.
Existing law provides that an offer to sell is not made in this state
merely because a radio or television program originating outside
this state is received in this state.
This bill would provide than an offer to sell is not made in this
state merely because a prospective franchisor, or a
franchisor who is not then offering a franchise for sale in
California and has not registered an offering under the Franchise
Investment Law , secures a space at a franchise trade show
from which it offers information about its products, services, or
system to the general public under specified circumstances. The bill
would also define a franchise trade show for purposes of the
Franchise Investment Law and would authorize a franchisor to
offer a franchise for sale at a franchise trade show, as specified.
Law.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 31013 of the Corporations Code is amended to
read:
31013. (a) An offer or sale of a franchise is made in this state
when an offer to sell is made in this state, or an offer to buy is
accepted in this state, or, if the franchisee is domiciled in this
state, the franchised business is or will be operated in this state.
(b) An offer to sell is made in this state when the offer either
originates from this state or is directed by the offeror to this
state and received at the place to which it is directed. An offer to
sell is accepted in this state when acceptance is communicated to the
offeror in this state; and acceptance is communicated to the offeror
in this state when the offeree directs it to the offeror in this
state reasonably believing the offeror to be in this state and it is
received at the place to which it is directed.
(c) An offer to sell is not made in this state merely because (1)
the publisher circulates or there is circulated on his behalf in this
state any bona fide newspaper or other publication of general,
regular, and paid circulation which has had more than two-thirds of
its circulation outside this state during the past 12 months, or (2)
a radio or television program originating outside this state is
received in this state.
(d) An offer to sell is not made in this state merely because a
franchisor, or a franchisor who is not then offering a
franchise for sale in California and has not registered an offering
under the provisions of Chapter 2 (commencing with Section
31110) 31110), secures a space at a franchise
trade show from which it offers information about its products,
services, or system to the general public if a
the franchisor or prospective franchisor does
both all of the following:
(1) Notifies the commissioner, in a form approved
established by the commissioner, of its intent
to attend and display its concept at the franchise trade show at
least seven 14 days before the
show. show accompanied by the following:
(A) A document, in a form approved by the commissioner, that
includes, at a minimum, all of the following:
(i) The franchise concept brand name and a brief description of
the potential franchise offering.
(ii) The legal name of the franchisor or prospective franchisor,
and the address where it is domiciled.
(iii) The names of the principal officers of the franchisor or
prospective franchisor.
(iv) The address where the franchisor or prospective franchisor
may be served legal process.
(B) If the franchisor or prospective franchisor already possesses
a current franchise disclosure document not yet registered in
California, a copy of the franchise disclosure document.
(2) Conspicuously posts in public view within its franchise trade
show booth a notice, in a form established by the commissioner, that
states, at a minimum, all of the following:
(A) The franchisor or prospective franchisor is not
offering a franchise for sale in California.
(B) The franchisor or prospective franchisor is not
legally able to offer a franchise for sale in California.
(C) If anyone associated with the franchisor or prospective
franchisor offers a franchise for sale or solicits an offer to
purchase a franchise in California, that action should be reported to
the commissioner.
(D) The contact information of the commissioner.
(e) The form described in paragraph (1) of subdivision (d) shall
be in the form and content prescribed by the commissioner, but, at a
minimum, shall state that it is unlawful for any person to offer or
sell a franchise in California unless the offer of the franchise has
been registered with the commissioner or is otherwise exempt.
SEC. 2. Section 31020 is added to the Corporations Code, to read:
31020. "Franchise trade show" means an event in this
state state, displaying multiple franchise brands and
open to multiple franchisors, that is advertised to, and
invites, the general public to that event where franchisors who
satisfy the reasonable criteria of the franchise trade show's
organizer may secure a space from where they can inform the members
of the general public in attendance about their existing and
prospective products, services, or systems. These
franchisors may offer a franchise for sale at a franchise trade show
pursuant to the provisions of this division.