Tag Archives: California

Suspending Franchise Sales

In several states that require franchise registration, franchisors should suspend franchise sales while an amendment or renewal application is pending with the state.  Franchisors commonly suspend franchise sales pending registration in most states that require franchise registration.  But California and New York each offers a unique and very different approach than a blackout or suspension of sales. California takes an approach that is eminently practical.  In California, a franchisor may deliver to a prospect the franchise disclosure document (“FDD”) as filed with state for renewal or amendment together with a written statement that the filing has been made but it has not …

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California Toughens Its Franchise Relationship Law

California franchisees will soon have additional statutory protections against a franchisor’s termination or non-renewal of the franchise without good cause, and new protections against the franchisor’s refusal to approve the transfer of the franchise without good cause. On October 11, 2015, Governor Jerry Brown signed into law Assembly Bill 525, substantially amending the California Franchise Relations Act (CFRA), which has been in effect in California since 1980. The revised CFRA applies to franchise agreements entered into or renewed on or after January 1, 2016, and to franchises of an indefinite duration that may be terminated without cause. (Section 20041 of the …

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The Contours of a Franchisor’s Vicarious Liability

In a ruling that reflects a clear understanding of the distinction between the roles of the franchisor and franchisee, the Appeals Court of Massachusetts recently held that Domino’s was not vicariously liable for the acts of its franchisee that resulted in the death of the franchisee’s delivery driver.  LeClairRyan represented the franchisor in the case, Lind v. Domino’s Pizza, LLC, 87 Mass. App. Ct. 650 (July 29, 2015). The facts of the case are tragic.  Alex Morales, a customer, telephoned the store around 2:30 a.m. to order a pizza.  Morales killed the delivery driver, Corey Lind, and was later convicted …

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Franchisors Vulnerable to Unfair Labor Practice Allegations

As expected, the National Labor Relations Board (NLRB) recently broadened the definition of joint employer.  In a 3-2 decision, the NLRB adopted the joint employment standard recommended by the NLRB’s General Counsel.  The ruling was issued August 27, 2015, in the case of Browning-Ferris Industries of California, Inc. (BFI). The Browning-Ferris case did not involve franchising, but it will have an important impact on franchising.  Franchisors are now more likely to be deemed joint employers of their franchisees’ employees for purposes of compliance with the National Labor Relations Act.  This is a shock to the franchise industry.

California’s Governor Brown Does the Right Thing

The big news in franchising last week was a nonevent.  Legislation in California that never should have become law did not become law.  The credit for this nondevelopment goes to Governor Jerry Brown, who vetoed Senate Bill 610, saying that if the legislation were to become law, it would “significantly impact California’s vast franchise industry.”  He wrote in his veto message that he needs “a better explanation of the scope of the problem” so he is “certain that the solution crafted will fix those problems and not create new ones.” California has long regulated franchising.  The California Franchise Investment Law, …

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How to Get Free Franchise Disclosure Documents

Of all the states that require franchise registration, only three make franchise registrations available online today:  Wisconsin, Minnesota, and California.  Having three states to choose from is a pleasure.  For many years, California was the only state that made franchise disclosure documents (FDDs) available to the public.  The only alternative was to pay an independent FDD service provider. I have tried all three websites.  Here is what I found: I like to start any search on the Wisconsin website.  The Franchise Search screen asks simply for the name of the franchise.  It can be the legal name of the franchisor …

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