In a move that will affect a number of franchise companies, yesterday California Governor Jerry Brown signed a new law that will require private home care agencies to become licensed in the State before providing service.
A franchisee who sued his franchisor for fraud learned the hard way why it’s important to read the Franchise Disclosure Document, cover to cover, before buying a franchise. The California Court of Appeals ruled against him because the disclosure document Big O gave to the franchisee before he bought contradicted each and every one of his claims.
SB 610, which would add a statutory duty of good faith and fair dealing to the California Franchise Relationship Act, has been tabled for the year by the bill’s sponsor. It will be available for consideration by the Assembly Committee next year.
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.”
A recent decision from a federal court in California addresses the enforceability of a general release of claims signed by former franchisees.
A federal court in Hawaii recently issued an opinion finding that a distribution agreement is not a franchise under Hawaii’s Franchise Investment Law. Where the distributor: (1) is not permitted to “substantially associate” its business with the manufacturer; and/or (2) pays only the bona fide wholesale price for its merchandise (and no other form of compensation) to the manufacturer, the relationship will typically not be considered a franchise under state laws.