Franchisee Groups Support California Fair Franchising Bill – AB 2305

California joins Vermont and Massachusetts in legislating fair franchise practices this year.  Assemblyman Jared Huffman is the main sponsor of the Level Playing Field for Small Businesses Act or AB 2305.  He says his bill aims to protect small businesses from “intentionally unfair practices” by franchisors and bankruptcies.  The supporters of this legislation say that there really is a growing need for such a law considering that franchisor – franchisee relationships are becoming worse over the years.  The Asian American Hotel Owners Association Franchise and Industry Relations (FAIR) committee co-chairman Jay S. Patel told, “This past year we have emphasized the importance of franchisors developing good faith and fair dealing practices and including them in the franchise agreements.  This legislation is a large step forward for fair franchising.”

Associations representing franchised small business entrepreneurs sang today in rare harmony in support of California’s new bill to protect franchisees from abusive franchising practices.

Last week California Assemblyman Jared Huffman (D-San Rafael) announced AB 2305, the Level Playing Field for Small Businesses Act. The law, co-sponsored by Assemblyman Tom Ammiano (D-13th), looks to be one of the most advanced fair franchising bills in the nation.

There looks to be a wave of state franchise relationship laws pushing forward. Vermont and Massachusetts will also vote on similar pieces of fair franchising legislation this year. That’s in addition to the franchise relationship law that was enacted in Rhode Island three years ago. What is at the heart of these new laws are complaints by franchisees that franchise contracts in the last twenty years have become intolerably lopsided in favor of franchisors, and abusive.

“This legislation will respect the importance and rights of franchisors while providing essential protections for thousands of small businesses throughout California so they can avoid bankruptcy and continue creating jobs in our communities,” said Assemblyman Huffman. “Unfortunately, abuses by some franchisors have resulted in small business franchisees losing everything trying to fight honest battles against intentionally unfair practices.”

The Asian American Hotel Owners Association, a group of 11,000 paid members that operate and lead almost half of hotel properties in America, announced today that the group “STRONGLY” supports California’s fair franchising bill. The organization has advocated and negotiated with franchisors for years on fair franchising practices. “We applaud the lawmakers in California and other states for introducing legislation that will stop franchisors from dealing unfairly with franchisees,” declared AAHOA Chairman Hemant Patel.

“Franchising is most successful when it mutually benefits both the franchisor and franchisee,” said AAHOA President Fred Schwartz. “It is reported that franchising is responsible for 760,000 businesses, 18 million jobs, 14 percent of the private sector employment, and over $500 billion in payroll. With this strong legislation, we can ensure the continued success of franchising at every level.”  …

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