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Franchise Legislation for California on Hold

With the Senate Bill 610 on hold until next year after sufficient votes in its favor failed to turn up, some of the key considerations challenging the good faith proposition for franchising in California raise questions about the necessity of the bill.  Supporters of the bill are eager to see how the bill will turn out next year when its status will be revisited.

Primary concerns of challenging parties included issues related to extensive court of law involvement in a variety of situations and concerns that the bill would simply promote excessive law suits between franchisors and franchisees, thus further straining the relationship between the two.  Lobbyists of large franchise businesses and upwards of 40 franchisors opposed the bill while franchise organizations and more than 700 individuals contacted assembly committee members in favor of its progress.

Considerations that the bill would render good faith based operation and standards of operation implemented by franchisors incompatible were discussed, which pointed out key scenarios necessitating an increase in court of law enforcement, while the ability of franchisors to implement sound operational practices could potentially decrease.  This consideration specifically focused in on standards related to hygiene and the sanitary environs of a franchise establishment, which the bill could potentially complicate for franchisors and franchisees alike should good faith requirements usurp franchisor ability to set and potentially alter the cleanliness standards of each location, even after an agreement is signed.

As a continuing focus, good faith concepts as they affect the franchisor-franchisee relationship remain challenging to define, though many supporters of the bill attest to the need for a bill enforcing the concept to create an even more just interaction between franchise partners and large franchise businesses.  One of the most powerful economies in the world, California state legislation affecting how franchises operate would serve to affect a wide variety of business operators and owners in diverse sectors, which is why attention to how the bill would ultimately impact franchising and the public sphere that supports it, whether positively or negatively or both, be diligently applied during future considerations.

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