Unlike most states, California’s registration and disclosure law does not stop applying when the franchise agreement is signed. An agreement between the parties to materially change (or amend) an existing franchise agreement is an event triggering special requirements in California.
The California Department of Corporations, which is charged with administering and enforcing California’s franchise laws announced that its restructuring plan has become effective as of today, and is now called the “Department of Business Oversight.”
Here’s an interesting case I recently came across. It features a franchisee based in Italy suing its California-based franchisor in California, alleging violations of California’s franchise laws.
One of the most misunderstood aspects of California’s franchise law is its regulation of negotiated sales. Under the law, if a California franchisee has been given a “special deal” that is not part of the franchisor’s standard offering, then the franchisor may be required to disclose the terms of that deal to subsequent California franchisees during the following year. How can your franchise comply with the law?
Differences between California’s statute and regulation on negotiated franchise sales can be confusing even to experienced practitioners. This article explains the reasons for the differences and offers suggestions for resolving the conflict between the two provisions.