California Assembly Bill AB1782 Amended / Bill

 BILL NUMBER: AB 1782AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 10, 2016 INTRODUCED BY Assembly Member Maienschein FEBRUARY 4, 2016 An act to amend Section 31013 of, and to add Section 31020 to, the Corporations Code, relating to franchises. LEGISLATIVE COUNSEL'S DIGEST AB 1782, as amended, Maienschein. Franchises: offer to sell: trade show. The Franchise Investment Law generally requires a franchisor to register with the Department of Business Oversight before an offer or sale of a franchise in this state and provides that a willful violation of this law is a crime. Existing law provides, among other things, that an offer or sale of a franchise is made in this state when an offer to sell is made in this state, or an offer to buy is accepted in this state, or, if the franchisee is domiciled in this state, the franchised business is or will be operated in this state. Existing law provides that an offer to sell is not made in this state merely because a radio or television program originating outside this state is received in this state. This bill would provide than an offer to sell is not made in this state merely because a  prospective   franchisor, or a  franchisor who is not then offering a franchise for sale in California and has not registered an offering under the Franchise Investment Law  ,  secures a space at a franchise trade show from which it offers information about its products, services, or system to the general public under specified circumstances. The bill would also define a franchise trade show for purposes of the Franchise Investment  Law and would authorize a franchisor to offer a franchise for sale at a franchise trade show, as specified.   Law.  Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 31013 of the Corporations Code is amended to read: 31013. (a) An offer or sale of a franchise is made in this state when an offer to sell is made in this state, or an offer to buy is accepted in this state, or, if the franchisee is domiciled in this state, the franchised business is or will be operated in this state. (b) An offer to sell is made in this state when the offer either originates from this state or is directed by the offeror to this state and received at the place to which it is directed. An offer to sell is accepted in this state when acceptance is communicated to the offeror in this state; and acceptance is communicated to the offeror in this state when the offeree directs it to the offeror in this state reasonably believing the offeror to be in this state and it is received at the place to which it is directed. (c) An offer to sell is not made in this state merely because (1) the publisher circulates or there is circulated on his behalf in this state any bona fide newspaper or other publication of general, regular, and paid circulation which has had more than two-thirds of its circulation outside this state during the past 12 months, or (2) a radio or television program originating outside this state is received in this state. (d) An offer to sell is not made in this state merely because a  franchisor, or a  franchisor who is not then offering a franchise for sale in California and has not registered an offering under the provisions of Chapter 2 (commencing with Section  31110)   31110),  secures a space at a franchise trade show from which it offers information about its products, services, or system to the general public if  a   the  franchisor  or prospective franchisor  does  both   all  of the following: (1) Notifies the commissioner, in a form  approved   established  by the commissioner, of its intent to attend and display its concept at the franchise trade show at least  seven   14  days before the  show.     show accompanied by the following:   (A) A document, in a form approved by the commissioner, that includes, at a minimum, all of the following:   (i) The franchise concept brand name and a brief description of the potential franchise offering.   (ii) The legal name of the franchisor or prospective franchisor, and the address where it is domiciled.   (iii) The names of the principal officers of the franchisor or prospective franchisor.   (iv) The address where the franchisor or prospective franchisor may be served legal process.   (B) If the franchisor or prospective franchisor already possesses a current franchise disclosure document not yet registered in California, a copy of the franchise disclosure document.  (2) Conspicuously posts in public view within its franchise trade show booth a notice, in a form established by the commissioner, that states, at a minimum, all of the following: (A) The franchisor  or prospective franchisor  is not offering a franchise for sale in California. (B) The franchisor  or prospective franchisor  is not legally able to offer a franchise for sale in California. (C) If anyone associated with the franchisor  or prospective franchisor  offers a franchise for sale or solicits an offer to purchase a franchise in California, that action should be reported to the commissioner. (D) The contact information of the commissioner.  (e) The form described in paragraph (1) of subdivision (d) shall be in the form and content prescribed by the commissioner, but, at a minimum, shall state that it is unlawful for any person to offer or sell a franchise in California unless the offer of the franchise has been registered with the commissioner or is otherwise exempt.  SEC. 2. Section 31020 is added to the Corporations Code, to read: 31020. "Franchise trade show" means an event in this  state   state, displaying multiple franchise brands and open to multiple franchisors,  that is advertised to, and invites, the general public to that event where franchisors who satisfy the reasonable criteria of the franchise trade show's organizer may secure a space from where they can inform the members of the general public in attendance about their existing and prospective products, services, or systems.  These franchisors may offer a franchise for sale at a franchise trade show pursuant to the provisions of this division.