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New regulations bill will lead to 'costly litigation,' IFA says

Leaders of the International Franchise Association urged lawmakers in California to oppose Assembly Bill 525, which the organization believes would pose "additional and unnecessary regulations on franchise small businesses."

April 16, 2015

"The unintended consequences of this bill would dramatically change the franchise relationship between franchisors and franchisees and we have serious concerns about some of the provisions included in the bill, particularly those that introduce vague and ambiguous language into the enforceability of franchise contracts which will ultimately lead to increased, unnecessary and costly litigation," said IFA President & CEO Steve Caldeira, CFE, in a statement. "The last thing we need is further government intervention into an industry that has proven itself as a steady job creator and bastion of small business ownership throughout the state."

Following an aggressive IFA lobbying effort by California franchisors and franchisees, California Governor Jerry Brown vetoed a similar bill, SB 610, last September.

"The franchise relationship is built on the common belief that there is a synergistic common goal of success for both franchisors and franchisees," said IFA Franchisee Forum chairman and BrightStar Care, BrightStar Senior Living and Mr. Handyman franchisee Jeffrey Tews. "The ability to have as much certainty as possible in that ongoing relationship is of utmost importance for all franchisees. Aspects of this legislation may create significant legal uncertainty for franchisees like me and my franchisor, which could lead to costly litigation. As the Chairman of the IFA’s Franchisee Forum and on behalf of California’s 80,000 franchise businesses, I urge policymakers to reject AB 525 in its current form."

Franchising