Capitol Alert

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Assembly approves bill for franchise owners

08/14/2014 12:50 PM

08/14/2014 9:28 PM

In a clash pitting large chains against the people who manage individual stores, legislation giving franchise owners more flexibility in managing their businesses squeaked out of the California Assembly on Thursday.

Lawmakers sought for hours to whip up support after failing to secure the votes needed to advance Senate Bill 610. The final tally was 41-27, and the bill now heads to the Senate.

Backers called the bill a boon to small-business owners, giving them more freedom to sell their franchises and making it more difficult for franchising parent companies to cancel contracts. They said owners of franchises currently have little leverage in shaping the terms under which they can run their stores. The American Association of Franchisees and Dealers sponsored the legislation.

“The terms of those agreements are dictated by the franchisor to the franchisee on a take-it-or-leave-it basis,” said Assemblyman Roger Dickinson, D-Sacramento. “This bill simply introduces more fairness into the arrangement.”

But the underlying philosophy of a franchise requires consistent service at different stores, critics argued. They said the bill would erode that uniformity and damage the brands large chains carefully cultivate.

“It’s all about quality control,” said Assemblyman Travis Allen, R-Huntington Beach. “This is the beauty of why franchises work.”

The International Franchise Association has purchased ads denouncing the bill, warning in ominous tones that the bill would undercut standards, endanger food safety and “radically change the franchise business model.”

Votes did not break down exclusively on partisan lines. Some Democrats voted against the bill or withheld votes. Assemblyman Scott Wilk, R-Santa Clarita, spoke in favor.

“Today we have a chance to stand for the little guy,” Wilk said.

Capitol Alert staff

Amy Chance
Political editor

Dan Smith
Capitol bureau chief

Jim Miller
California policy and politics
Capitol Alert editor

David Siders
Brown administration

Christopher Cadelago
California politics and health care

Jeremy B. White

Alexei Koseff
Insider Edition editor


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