March 18, 2016

California’s New Franchise Act Has Unintended Consequences

By Rupert M. Barkoff, Kilpatrick Townsend & Stockton LLP

The enactment of California’s new franchise relationship law, which amends the California Franchise Relations Act (CFRA), Cal. Bus. & Prof. Code §20000 et seq., is a monumental event in the history of franchise law for several reasons.

First, this is the first state relationship law enacted since Iowa adopted its relationship law in 1992—24 years ago. Most of the state franchise relationship laws (and most of the state franchise sales and disclosure laws) were in place by 1975, in the formative years of franchise law. Although franchisee advocates have made many attempts to enact relationship laws over the years, virtually all have failed. Thus, the regulatory scheme we have today is not that different from the one I saw when I began to practice franchise law back in the last century.

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