Bill Text: CA AB676 | 2021-2022 | Regular Session | Amended
Bill Title: Franchises.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2022-09-29 - Chaptered by Secretary of State - Chapter 728, Statutes of 2022. [AB676 Detail]
Download: California-2021-AB676-Amended.html
Amended
IN
Assembly
January 03, 2022 |
Introduced by Assembly Member Holden |
February 12, 2021 |
LEGISLATIVE COUNSEL'S DIGEST
This bill would prohibit those provisions from applying to a transfer in which the new transferee agrees to receive the franchise by assuming or taking subject to the existing franchise agreement, and the existing franchise agreement permits such a transfer without the requirement that a new franchise agreement be
executed between the franchisor and the new franchisee.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 20015 of the Business and Professions Code is amended to read:20015.
(a) The provisions of this chapter apply to any franchise when either the franchisee is domiciled in this state or the franchised business is or has been operated in this state.SEC. 2.
Section 20022 of the Business and Professions Code is amended to read:20022.
(a) Except as provided in this section, upon a lawful termination or nonrenewal of a franchisee, the franchisor shall purchase from the franchisee, at the value of price paid, minus depreciation, all inventory, supplies, equipment, fixtures, and furnishings purchased or paid for under the terms of the franchise agreement or any ancillary or collateral agreement by the franchisee to the franchisor or its approved suppliers and sources, that are, at the time of the notice of termination or nonrenewal, in the possession of the franchisee or used by the franchisee in the franchise business. The franchisor shall have the right to receive clear title to and possession of all items purchased from the franchisee under this section.(a)The franchisee shall, prior to the sale, assignment, or transfer of a franchise, all or substantially all of the assets of a franchise business, or a controlling or noncontrolling interest in the franchise business, to another person, notify the franchisor, of the franchisee’s intent to sell, transfer, or assign the franchise, all or substantially all of the assets of the franchise business, or the controlling or noncontrolling interest in the franchise business. The notice shall be in writing, delivered to the franchisor by business courier or by receipted mail and include all of the following:
(1)The proposed transferee’s name and address.
(2)A copy of all agreements related to the sale,
assignment, or transfer of the franchise, the assets of the franchise business, or the interest in the franchise business.
(3)The proposed transferee’s application for approval to become the successor franchisee. The application shall include all forms, financial disclosures, and related information generally utilized by the franchisor in reviewing prospective new franchisees, if those forms are readily made available to the existing franchisee. If the forms are not readily available, the franchisee shall request and the franchisor shall deliver the forms to the franchisee by business courier or receipted mail within 15 calendar days. As soon as practicable after the receipt of the proposed transferee’s application, the franchisor shall notify, in writing, the franchisee and the proposed transferee of any additional information or documentation necessary to complete the transfer application. If the franchisor’s then-existing standards for the
approval of new or renewing franchisees are not readily available to the franchisee when the franchisee notifies the franchisor of the franchisee’s intent to sell, transfer, or assign the franchise, the assets of the franchise business, or the controlling or noncontrolling interest in the franchise business, the franchisor shall communicate the standards to the franchisee within 15 calendar days.
(b)(1)The franchisor shall, within 60 days after the receipt of all of the necessary information and documentation required pursuant to subdivision (a), or as specified by written agreement between the franchisor and the franchisee, notify the franchisee of the approval or disapproval of the proposed sale, assignment, or transfer. The notice shall be in writing and shall be delivered to the franchisee by business courier or receipted mail. A proposed sale, assignment, or transfer shall be deemed approved, unless disapproved by
the franchisor in the manner provided by this subdivision. If the proposed sale, assignment, or transfer is disapproved, the franchisor shall include in the notice of disapproval a statement setting forth the reasons for the disapproval.
(2)In any action in which the franchisor’s disapproval of a sale, assignment, or transfer pursuant to this subdivision is an issue, the reasonableness of the franchisor’s decision shall be a question of fact requiring consideration of all existing circumstances. For purposes of this paragraph, the finder of fact may be an arbitrator specified in the franchise agreement and who satisfies the requirements of Section 20040. Nothing in this paragraph shall prohibit summary judgment when the reasonableness of transfer approval or disapproval can be decided as a matter of law.
(3)This section does not require a franchisor to exercise a contractual
right of first refusal.
(c)This section does not prohibit a franchisor from exercising the contractual right of first refusal to purchase a franchise, all or substantially all of the assets of a franchise business, or a controlling or noncontrolling interest in a franchise business after receipt of a bona fide offer from a proposed purchaser to purchase the franchise, assets, or interest. Any franchisor exercising the contractual right of first refusal shall offer the seller payment at least equal to the value offered in the bona fide offer.
(d)For the purpose of this section “franchise business” shall include a legal entity that is a party to a franchise agreement.
(e)This section shall not apply to a transfer in which the new
transferee agrees to receive the franchise by assuming, or taking subject to, the existing franchise agreement, and the existing franchise agreement permits such a transfer without the requirement that a new franchise agreement be executed between the franchisor and the new franchisee.