Susan Kezios outlines on BlueMauMau that Franchisors are against California’s fair franchising bill 2305, known as the Level Playing Field for Small Businesses Act. Here are what opponents postulate and these are the actual facts on why the assembly bill is good for California business.
Opponents Claim: “Assembly Bill 2305 will hurt consumers. Franchisors impose standards and expectations on all franchisees to protect the brand’s reputation, other franchise owners nearby, and, ultimately, the general public – their collective customer. This bill will allow sub-standard franchise outlets to continue offering inferior products and services to consumers.”
The Facts Are: Assembly Bill 2305 simply says that franchisors may not terminate a franchise prior to its expiration except for good cause. Good cause means a substantial and material breach of the franchise agreement. Endangering public health or safety is substantial and material. A light bulb that burns out while the franchisor field manager is inspecting the franchise is not.
AB 2305 also gives franchisees an ample amount of time (60 days) to be in accordance with the current standards and terms equally applicable to all franchisees before termination. This amount of time is not uncommon in all manner of commercial transactions, including leases. When a franchisee gets terminated arbitrarily or without good cause, it is not only the franchisee who is hurt, the lenders, consumers and communities suffer also.
Franchisees are the first line of defense when it comes to protecting the brand’s reputation because franchisees are the franchisors’ ‘first’ customer (i.e., as the purchaser of the franchise). They have invested their own financial and human resources to expand the franchisor’s brand. They don’t want sub-standard franchise outlets in their systems either.
Read More at: BlueMauMau