A bill by state Sen. Hannah-Beth Jackson, D-Santa Barbara, to level the playing field between small-business franchisees and their large corporate owners passed out of the Senate on Thursday and is headed to Gov. Jerry Brown for consideration. The vote was 23-9.
Senate Bill 610 seeks to correct an imbalance of power between convenience stores, fast-food restaurants and other franchisees and the giant, often out-of-state corporations that oversee them. SB 610 would provide greater protections to franchisees in the contracts that govern the relationship between them. Franchise agreements are typically hundreds of pages of technical information detailing the rights and responsibilities of the franchisor and franchisee.
“Current law allows these corporations to put these small franchisees out of business for even the most minor and arbitrary violations. There are more than 80,000 of these small business owners in California, and many of them have spent their life savings to open up a business. They are working hard to live the American dream and they deserve a fair chance,” Jackson said. “This bill would put these small business owners on a more equal legal footing and protect them from unfair actions that take away their livelihoods.”
SB 610 protects franchisees by:
» Barring corporations from putting a franchisee out of business unless they have committed a “substantial and material breach “ of the franchise agreement. This is the same standard that applies to all other business contracts in California, and eight other states have a similar standard in place.
» Protecting franchisees’ ability to sell or transfer their business without unreasonable interference.
» Protecting them from retaliation if they join a franchisee association.
Brown has until Sept. 30 to sign the bill. The bill has support of Small Business California, the Coalition of Franchise Association, the California Labor Federation and the SEIU, among others.
Jackson represents the 19th Senate District, which includes all of Santa Barbara County and western Ventura County.
— Lisa Gardiner is the communications director for state Sen. Hannah-Beth Jackson.