IFA Opposes Current Form of Damaging California Franchise Legislation

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FOR IMMEDIATE RELEASE


Contact:

Matthew Haller, 202-460-8356

Jenna Weisbord, 310-995-0839

mhaller@franchise.org

jweisbord@franchise.org

@franchising411


IFA OPPOSES CURRENT FORM OF DAMAGING CALIFORNIA FRANCHISE LEGISLATION


WASHINGTON, May 14, 2015—International Franchise Association President & CEO Steve Caldeira issued the following statement in response to the passage of Assembly Bill 525 out of the California State Assembly today. IFA opposes the current version of the bill, which would undermine existing business contracts between franchisors and franchisees. AB 525 would create untested new statutory language that will lead to costly litigation and hinder future franchise development for an industry that has outpaced overall economic growth for five years since the recession.


“In keeping with the spirit of Governor Brown’s veto message last year on this matter, the International Franchise Association has been working in good faith with Assemblyman Holden (D-CA-41) to reach a consensus on a number of outstanding contractual issues between franchisees and franchisors.


“Given our commitment, we were gravely disappointed that the author, after inviting us to submit our comments, turned around and scheduled for a vote this defective legislation without notice to the parties who believed in good faith to be in discussions regarding modifications to the bill. We hope in the future we can take Assemblyman Holden at his word about his pledge to amending the draconian aspects of AB 525, particularly the section dealing with monetization of equity.


“The bill’s current language in this section is unprecedented in its scope and would reward a franchisee who is terminated, even for a legitimate violation of its franchise agreement.


“Absent our requested amendments, AB 525 will remain a threat to the current system that benefits both franchisees and franchisors, which together employ nearly 1-million California workers at more than 82,000 franchise locations throughout the state. Not only do they generate in excess of $94 billion in economic output in California annually, but franchise businesses are growing faster than non-franchises, and have been for the past five years.


“AB 525 must be amended to ensure the continued success of these small businesses in the state. We look forward to working with the author in the Senate to remove our concerns.”


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About the International Franchise Association

Celebrating 55 years of excellence, education and advocacy, the International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 780,000 franchise establishments that support nearly 8.9 million direct jobs, $890 billion of economic output for the U.S. economy and 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.


1900 K St., N.W., Suite 700 Washington, DC 20006 USA


Phone: +1 202/628-8000 Fax: +1 202/628-0812 www.franchise.org

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