Franchise legislation was approved by California State Assembly last Thursday, which intends on protecting franchisees from malpractice.
Governor Jerry Brown vetoed a similar bill, SB 610, in September after foreseeing complications. The Vague and questionable language did not settle well with many, including the International Franchise Association (IFA).
Coupled with concern of obscure measures, Brown suggested suitable laws were already in place to protect small business owners of predatory practices.
SB 610, sought to limit termination of franchise agreements without serious transgression.
The Small Business Investment Protection Act passed by a margin of 54 to 10.
Ambiguity caused drafters of the new bill to be more direct. AB 525 restrains multimillion dollar corporations that terminate franchise contracts without root of negligence. Along with the act were defined conditions of a franchise elimination. If failure to comply with franchise agreements, corporate is required to give owners time to correct issues.
Franchise relationships are typically one sided and could seriously damage what a small business owner has worked hard to build.
To protect franchisees, the bill requires compensation for termination. Other than a legitimate breach of contact, business owners receive equitable value or sell to another suitor for a fair price. Previous requirements only covered inventory.
The IFA strongly opposes the bill because it would threaten existing contracts. Allegedly AB 525 will cause disputes and hinder future franchise growth.
Assembly Bill 525 will now head to the state Senate.
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Don’t wait until late in the game to plan for your point of sale system. The benefits of establishing an early relationship with your point of sale company are many — not just in demystifying the process and determining the optimal system, but even before you decide on a franchise direction.
Sintel Systems is the only direct to end user full-service provider of tailored Point of Sale systems across retail, restaurant and service industries, including frozen yogurt shops, pizzerias, sushi restaurants, cafés and retail stores.
As a single source for business solutions, our experienced, knowledgeable team negotiates the complex POS landscape for you to enable you to find the right POS system for your business and budget. Hardware – Software – Support