| 1 | | - | Senate Bill No. 919 CHAPTER 518An act to amend Sections 31210, 31300, and 31500 of, to add Section 31020 to, and to add Part 7 (commencing with Section 31520) to Division 5 of Title 4 of, the Corporations Code, relating to franchises. [ Approved by Governor September 24, 2024. Filed with Secretary of State September 24, 2024. ] LEGISLATIVE COUNSEL'S DIGESTSB 919, Umberg. Franchise Investment Law: franchise brokers.Existing law, the Franchise Investment Law, generally provides for the regulation of the offer and sale of franchises and requires the Commissioner of Financial Protection and Innovation to maintain a risk-based process of reviewing franchise applications with emphasis on risks associated with the franchisors financial condition, the franchisors compliance record, and significant deficiencies with the franchisors application. The law requires specific written disclosures, and authorizes the sale of a franchise to be exempt from specified requirements if the franchisor meets certain disclosure and notice requirements. Existing law makes it unlawful for a person to offer or sell any franchise unless the franchise has been registered or exempted pursuant to these provisions.This bill, contingent upon an appropriation by the Legislature, would require a franchise broker, as defined, to register with the commissioner before engaging in certain activities, including offering or selling a franchise in this state. This registration process would require the franchise broker to sign and verify a specified form, under penalty of perjury. The bill would make it unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to these provisions. The bill would authorize the commissioner to summarily issue a stop order suspending or revoking a registration under these provisions and would prescribe a hearing process if the commissioner receives a written request for hearing from the franchise broker, as specified. The bill would impose certain recordkeeping and regulatory requirements on franchise brokers and would make various actions by franchise brokers unlawful. The bill would make these provisions operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the above-described appropriation is made.Existing law makes it unlawful for any person to effect or to attempt to effect a sale of a franchise unless, among other exceptions, the person is identified in an application or amended application with the commissioner, licensed by the Department of Real Estate as a real estate broker or real estate salesperson, or licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.This bill would add as an exception to the provisions described above a person registered as a franchise broker.Under existing law, a person who offers or sells a franchise in violation of specified provisions is liable to the franchisee or subfranchisor, who may sue for specified damages.This bill would make a franchise broker who offers or sells a franchise in violation of specified provisions liable to the franchisee or franchisor, who may sue for damages, as specified. Existing law requires the commissioner to charge and collect specified fees in connection with an application for registration for, renewal of, and amendment of, a registration of an offer of franchises, as specified, which are credited to the Financial Protection Fund.This bill would establish specified fees in connection with an application for registration or amendment of a registration as a franchise broker, and would require the commissioner to charge and collect those fees.By expanding the crime of perjury, as specified above, this bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 31020 is added to the Corporations Code, to read:31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business.SEC. 2. Section 31210 of the Corporations Code is amended to read:31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520).SEC. 3. Section 31300 of the Corporations Code is amended to read:31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee.SEC. 4. Section 31500 of the Corporations Code is amended to read:31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50).SEC. 5. Part 7 (commencing with Section 31520) is added to Division 5 of Title 4 of the Corporations Code, to read:PART 7. FRANCHISE BROKERS31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective.31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner.31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158.31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state.31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner.31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand.31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made.SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. |
|---|
| 1 | + | Enrolled August 30, 2024 Passed IN Senate August 28, 2024 Passed IN Assembly August 26, 2024 Amended IN Assembly August 22, 2024 Amended IN Assembly August 19, 2024 Amended IN Assembly June 26, 2024 Amended IN Assembly June 19, 2024 Amended IN Senate May 16, 2024 Amended IN Senate March 14, 2024 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Senate Bill No. 919Introduced by Senator UmbergJanuary 10, 2024An act to amend Sections 31210, 31300, and 31500 of, to add Section 31020 to, and to add Part 7 (commencing with Section 31520) to Division 5 of Title 4 of, the Corporations Code, relating to franchises.LEGISLATIVE COUNSEL'S DIGESTSB 919, Umberg. Franchise Investment Law: franchise brokers.Existing law, the Franchise Investment Law, generally provides for the regulation of the offer and sale of franchises and requires the Commissioner of Financial Protection and Innovation to maintain a risk-based process of reviewing franchise applications with emphasis on risks associated with the franchisors financial condition, the franchisors compliance record, and significant deficiencies with the franchisors application. The law requires specific written disclosures, and authorizes the sale of a franchise to be exempt from specified requirements if the franchisor meets certain disclosure and notice requirements. Existing law makes it unlawful for a person to offer or sell any franchise unless the franchise has been registered or exempted pursuant to these provisions.This bill, contingent upon an appropriation by the Legislature, would require a franchise broker, as defined, to register with the commissioner before engaging in certain activities, including offering or selling a franchise in this state. This registration process would require the franchise broker to sign and verify a specified form, under penalty of perjury. The bill would make it unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to these provisions. The bill would authorize the commissioner to summarily issue a stop order suspending or revoking a registration under these provisions and would prescribe a hearing process if the commissioner receives a written request for hearing from the franchise broker, as specified. The bill would impose certain recordkeeping and regulatory requirements on franchise brokers and would make various actions by franchise brokers unlawful. The bill would make these provisions operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the above-described appropriation is made.Existing law makes it unlawful for any person to effect or to attempt to effect a sale of a franchise unless, among other exceptions, the person is identified in an application or amended application with the commissioner, licensed by the Department of Real Estate as a real estate broker or real estate salesperson, or licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.This bill would add as an exception to the provisions described above a person registered as a franchise broker.Under existing law, a person who offers or sells a franchise in violation of specified provisions is liable to the franchisee or subfranchisor, who may sue for specified damages.This bill would make a franchise broker who offers or sells a franchise in violation of specified provisions liable to the franchisee or franchisor, who may sue for damages, as specified. Existing law requires the commissioner to charge and collect specified fees in connection with an application for registration for, renewal of, and amendment of, a registration of an offer of franchises, as specified, which are credited to the Financial Protection Fund.This bill would establish specified fees in connection with an application for registration or amendment of a registration as a franchise broker, and would require the commissioner to charge and collect those fees.By expanding the crime of perjury, as specified above, this bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 31020 is added to the Corporations Code, to read:31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business.SEC. 2. Section 31210 of the Corporations Code is amended to read:31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520).SEC. 3. Section 31300 of the Corporations Code is amended to read:31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee.SEC. 4. Section 31500 of the Corporations Code is amended to read:31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50).SEC. 5. Part 7 (commencing with Section 31520) is added to Division 5 of Title 4 of the Corporations Code, to read:PART 7. FRANCHISE BROKERS31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective.31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner.31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158.31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state.31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner.31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand.31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made.SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. |
|---|
| 14 | 29 | | |
|---|
| 15 | 30 | | LEGISLATIVE COUNSEL'S DIGEST |
|---|
| 16 | 31 | | |
|---|
| 17 | 32 | | ## LEGISLATIVE COUNSEL'S DIGEST |
|---|
| 18 | 33 | | |
|---|
| 19 | 34 | | SB 919, Umberg. Franchise Investment Law: franchise brokers. |
|---|
| 20 | 35 | | |
|---|
| 21 | 36 | | Existing law, the Franchise Investment Law, generally provides for the regulation of the offer and sale of franchises and requires the Commissioner of Financial Protection and Innovation to maintain a risk-based process of reviewing franchise applications with emphasis on risks associated with the franchisors financial condition, the franchisors compliance record, and significant deficiencies with the franchisors application. The law requires specific written disclosures, and authorizes the sale of a franchise to be exempt from specified requirements if the franchisor meets certain disclosure and notice requirements. Existing law makes it unlawful for a person to offer or sell any franchise unless the franchise has been registered or exempted pursuant to these provisions.This bill, contingent upon an appropriation by the Legislature, would require a franchise broker, as defined, to register with the commissioner before engaging in certain activities, including offering or selling a franchise in this state. This registration process would require the franchise broker to sign and verify a specified form, under penalty of perjury. The bill would make it unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to these provisions. The bill would authorize the commissioner to summarily issue a stop order suspending or revoking a registration under these provisions and would prescribe a hearing process if the commissioner receives a written request for hearing from the franchise broker, as specified. The bill would impose certain recordkeeping and regulatory requirements on franchise brokers and would make various actions by franchise brokers unlawful. The bill would make these provisions operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the above-described appropriation is made.Existing law makes it unlawful for any person to effect or to attempt to effect a sale of a franchise unless, among other exceptions, the person is identified in an application or amended application with the commissioner, licensed by the Department of Real Estate as a real estate broker or real estate salesperson, or licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.This bill would add as an exception to the provisions described above a person registered as a franchise broker.Under existing law, a person who offers or sells a franchise in violation of specified provisions is liable to the franchisee or subfranchisor, who may sue for specified damages.This bill would make a franchise broker who offers or sells a franchise in violation of specified provisions liable to the franchisee or franchisor, who may sue for damages, as specified. Existing law requires the commissioner to charge and collect specified fees in connection with an application for registration for, renewal of, and amendment of, a registration of an offer of franchises, as specified, which are credited to the Financial Protection Fund.This bill would establish specified fees in connection with an application for registration or amendment of a registration as a franchise broker, and would require the commissioner to charge and collect those fees.By expanding the crime of perjury, as specified above, this bill would impose a state-mandated local program.The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.This bill would provide that no reimbursement is required by this act for a specified reason. |
|---|
| 22 | 37 | | |
|---|
| 23 | 38 | | Existing law, the Franchise Investment Law, generally provides for the regulation of the offer and sale of franchises and requires the Commissioner of Financial Protection and Innovation to maintain a risk-based process of reviewing franchise applications with emphasis on risks associated with the franchisors financial condition, the franchisors compliance record, and significant deficiencies with the franchisors application. The law requires specific written disclosures, and authorizes the sale of a franchise to be exempt from specified requirements if the franchisor meets certain disclosure and notice requirements. Existing law makes it unlawful for a person to offer or sell any franchise unless the franchise has been registered or exempted pursuant to these provisions. |
|---|
| 24 | 39 | | |
|---|
| 25 | 40 | | This bill, contingent upon an appropriation by the Legislature, would require a franchise broker, as defined, to register with the commissioner before engaging in certain activities, including offering or selling a franchise in this state. This registration process would require the franchise broker to sign and verify a specified form, under penalty of perjury. The bill would make it unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to these provisions. The bill would authorize the commissioner to summarily issue a stop order suspending or revoking a registration under these provisions and would prescribe a hearing process if the commissioner receives a written request for hearing from the franchise broker, as specified. The bill would impose certain recordkeeping and regulatory requirements on franchise brokers and would make various actions by franchise brokers unlawful. The bill would make these provisions operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the above-described appropriation is made. |
|---|
| 26 | 41 | | |
|---|
| 27 | 42 | | Existing law makes it unlawful for any person to effect or to attempt to effect a sale of a franchise unless, among other exceptions, the person is identified in an application or amended application with the commissioner, licensed by the Department of Real Estate as a real estate broker or real estate salesperson, or licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968. |
|---|
| 28 | 43 | | |
|---|
| 29 | 44 | | This bill would add as an exception to the provisions described above a person registered as a franchise broker. |
|---|
| 30 | 45 | | |
|---|
| 31 | 46 | | Under existing law, a person who offers or sells a franchise in violation of specified provisions is liable to the franchisee or subfranchisor, who may sue for specified damages. |
|---|
| 32 | 47 | | |
|---|
| 33 | 48 | | This bill would make a franchise broker who offers or sells a franchise in violation of specified provisions liable to the franchisee or franchisor, who may sue for damages, as specified. |
|---|
| 34 | 49 | | |
|---|
| 35 | 50 | | Existing law requires the commissioner to charge and collect specified fees in connection with an application for registration for, renewal of, and amendment of, a registration of an offer of franchises, as specified, which are credited to the Financial Protection Fund. |
|---|
| 36 | 51 | | |
|---|
| 37 | 52 | | This bill would establish specified fees in connection with an application for registration or amendment of a registration as a franchise broker, and would require the commissioner to charge and collect those fees. |
|---|
| 38 | 53 | | |
|---|
| 39 | 54 | | By expanding the crime of perjury, as specified above, this bill would impose a state-mandated local program. |
|---|
| 40 | 55 | | |
|---|
| 41 | 56 | | The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. |
|---|
| 42 | 57 | | |
|---|
| 43 | 58 | | This bill would provide that no reimbursement is required by this act for a specified reason. |
|---|
| 44 | 59 | | |
|---|
| 45 | 60 | | ## Digest Key |
|---|
| 46 | 61 | | |
|---|
| 47 | 62 | | ## Bill Text |
|---|
| 48 | 63 | | |
|---|
| 49 | 64 | | The people of the State of California do enact as follows:SECTION 1. Section 31020 is added to the Corporations Code, to read:31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business.SEC. 2. Section 31210 of the Corporations Code is amended to read:31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520).SEC. 3. Section 31300 of the Corporations Code is amended to read:31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee.SEC. 4. Section 31500 of the Corporations Code is amended to read:31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50).SEC. 5. Part 7 (commencing with Section 31520) is added to Division 5 of Title 4 of the Corporations Code, to read:PART 7. FRANCHISE BROKERS31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective.31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner.31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158.31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state.31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner.31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand.31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made.SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. |
|---|
| 50 | 65 | | |
|---|
| 51 | 66 | | The people of the State of California do enact as follows: |
|---|
| 52 | 67 | | |
|---|
| 53 | 68 | | ## The people of the State of California do enact as follows: |
|---|
| 54 | 69 | | |
|---|
| 55 | 70 | | SECTION 1. Section 31020 is added to the Corporations Code, to read:31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business. |
|---|
| 56 | 71 | | |
|---|
| 57 | 72 | | SECTION 1. Section 31020 is added to the Corporations Code, to read: |
|---|
| 58 | 73 | | |
|---|
| 59 | 74 | | ### SECTION 1. |
|---|
| 60 | 75 | | |
|---|
| 61 | 76 | | 31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business. |
|---|
| 62 | 77 | | |
|---|
| 63 | 78 | | 31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business. |
|---|
| 64 | 79 | | |
|---|
| 65 | 80 | | 31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach.(b) A franchise broker does not include any of the following:(1) A franchisor or its officers, directors, or employees.(2) A subfranchisor or its officers, directors, or employees.(3) An area representative or its officers, directors, or employees.(4) An employee of an affiliate of a franchisor or subfranchisor.(5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business. |
|---|
| 66 | 81 | | |
|---|
| 67 | 82 | | |
|---|
| 68 | 83 | | |
|---|
| 69 | 84 | | 31020. (a) Franchise broker means a person who directly or indirectly engages in the business of the offer or sale of a franchise, regardless of the title used by the person or any organization with which they are affiliated, and receives or is promised a fee, commission, or other form of consideration from a franchisor, subfranchisor, franchisee, or affiliate of a franchisor, subfranchisor, or franchisee. Common titles franchise brokers use include, but are not limited to, franchise seller, broker network, broker organization, franchise sales organization, consultant, and coach. |
|---|
| 70 | 85 | | |
|---|
| 71 | 86 | | (b) A franchise broker does not include any of the following: |
|---|
| 72 | 87 | | |
|---|
| 73 | 88 | | (1) A franchisor or its officers, directors, or employees. |
|---|
| 74 | 89 | | |
|---|
| 75 | 90 | | (2) A subfranchisor or its officers, directors, or employees. |
|---|
| 76 | 91 | | |
|---|
| 77 | 92 | | (3) An area representative or its officers, directors, or employees. |
|---|
| 78 | 93 | | |
|---|
| 79 | 94 | | (4) An employee of an affiliate of a franchisor or subfranchisor. |
|---|
| 80 | 95 | | |
|---|
| 81 | 96 | | (5) A franchisee of the franchise offering being presented to a prospective franchisee, unless the franchisee operates a franchised broker business. |
|---|
| 82 | 97 | | |
|---|
| 83 | 98 | | SEC. 2. Section 31210 of the Corporations Code is amended to read:31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520). |
|---|
| 84 | 99 | | |
|---|
| 85 | 100 | | SEC. 2. Section 31210 of the Corporations Code is amended to read: |
|---|
| 86 | 101 | | |
|---|
| 87 | 102 | | ### SEC. 2. |
|---|
| 88 | 103 | | |
|---|
| 89 | 104 | | 31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520). |
|---|
| 90 | 105 | | |
|---|
| 91 | 106 | | 31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520). |
|---|
| 92 | 107 | | |
|---|
| 93 | 108 | | 31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following:(a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division.(b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson.(c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968.(d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520). |
|---|
| 94 | 109 | | |
|---|
| 95 | 110 | | |
|---|
| 96 | 111 | | |
|---|
| 97 | 112 | | 31210. It is unlawful for any person to effect or attempt to effect a sale of a franchise in this state, except in transactions exempted under Chapter 1 (commencing with Section 31100) of Part 2 of this division, unless that person is any of the following: |
|---|
| 98 | 113 | | |
|---|
| 99 | 114 | | (a) Identified in Item 2 of a franchise disclosure document submitted with an application or amended application filed with the commissioner pursuant to Part 2 (commencing with Section 31100) of this division. |
|---|
| 100 | 115 | | |
|---|
| 101 | 116 | | (b) Licensed by the Department of Real Estate as a real estate broker or real estate salesperson. |
|---|
| 102 | 117 | | |
|---|
| 103 | 118 | | (c) Licensed by the commissioner as a broker-dealer or agent pursuant to the Corporate Securities Law of 1968. |
|---|
| 104 | 119 | | |
|---|
| 105 | 120 | | (d) Registered as a franchise broker pursuant to Part 7 (commencing with Section 31520). |
|---|
| 106 | 121 | | |
|---|
| 107 | 122 | | SEC. 3. Section 31300 of the Corporations Code is amended to read:31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee. |
|---|
| 108 | 123 | | |
|---|
| 109 | 124 | | SEC. 3. Section 31300 of the Corporations Code is amended to read: |
|---|
| 110 | 125 | | |
|---|
| 111 | 126 | | ### SEC. 3. |
|---|
| 112 | 127 | | |
|---|
| 113 | 128 | | 31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee. |
|---|
| 114 | 129 | | |
|---|
| 115 | 130 | | 31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee. |
|---|
| 116 | 131 | | |
|---|
| 117 | 132 | | 31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission.(b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.(2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee. |
|---|
| 118 | 133 | | |
|---|
| 119 | 134 | | |
|---|
| 120 | 135 | | |
|---|
| 121 | 136 | | 31300. (a) Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable care, would not have known, of the untruth or omission. |
|---|
| 122 | 137 | | |
|---|
| 123 | 138 | | (b) (1) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby. |
|---|
| 124 | 139 | | |
|---|
| 125 | 140 | | (2) Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the franchisee. |
|---|
| 126 | 141 | | |
|---|
| 127 | 142 | | SEC. 4. Section 31500 of the Corporations Code is amended to read:31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50). |
|---|
| 128 | 143 | | |
|---|
| 129 | 144 | | SEC. 4. Section 31500 of the Corporations Code is amended to read: |
|---|
| 130 | 145 | | |
|---|
| 131 | 146 | | ### SEC. 4. |
|---|
| 132 | 147 | | |
|---|
| 133 | 148 | | 31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50). |
|---|
| 134 | 149 | | |
|---|
| 135 | 150 | | 31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50). |
|---|
| 136 | 151 | | |
|---|
| 137 | 152 | | 31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund.(b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675).(c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450).(d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50).(e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121.(f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150).(g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675).(h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450).(i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50). |
|---|
| 138 | 153 | | |
|---|
| 139 | 154 | | |
|---|
| 140 | 155 | | |
|---|
| 141 | 156 | | 31500. (a) The commissioner shall charge and collect the fees fixed by this section. All fees and charges collected under this section shall be transmitted to the Treasurer at least weekly, accompanied by a detailed statement thereof and shall be credited to the State Corporations Fund. |
|---|
| 142 | 157 | | |
|---|
| 143 | 158 | | (b) The fee for filing an application for registration of the offer of franchises under Section 31111 is six hundred seventy-five dollars ($675). |
|---|
| 144 | 159 | | |
|---|
| 145 | 160 | | (c) The fee for filing an application for renewal of a registration under Section 31121 is four hundred fifty dollars ($450). |
|---|
| 146 | 161 | | |
|---|
| 147 | 162 | | (d) The fee for filing an amendment to the application filed under Section 31111 or 31121 after the effective date of the registration of the offer of franchises, is fifty dollars ($50). |
|---|
| 148 | 163 | | |
|---|
| 149 | 164 | | (e) The fee for filing an application for material modification under Section 31125 is fifty dollars ($50), whether or not it accompanies an application under Section 31111 or 31121. |
|---|
| 150 | 165 | | |
|---|
| 151 | 166 | | (f) The fee for filing the initial notice of exemption under Section 31101 is four hundred fifty dollars ($450) and the fee for filing each consecutive subsequent notice of exemption under these provisions is one hundred fifty dollars ($150). |
|---|
| 152 | 167 | | |
|---|
| 153 | 168 | | (g) The fee for filing an application for approval of a written notice of violation under Section 31303 or 31304 is six hundred seventy-five dollars ($675). |
|---|
| 154 | 169 | | |
|---|
| 155 | 170 | | (h) The fee for filing an application for registration as a franchise broker under Part 7 (commencing with Section 31520) is four hundred fifty dollars ($450). |
|---|
| 156 | 171 | | |
|---|
| 157 | 172 | | (i) The fee for filing an application for amendment of a registration as a franchise broker under Part 7 (commencing with Section 31520) is fifty dollars ($50). |
|---|
| 158 | 173 | | |
|---|
| 159 | 174 | | SEC. 5. Part 7 (commencing with Section 31520) is added to Division 5 of Title 4 of the Corporations Code, to read:PART 7. FRANCHISE BROKERS31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective.31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner.31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158.31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state.31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner.31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand.31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made. |
|---|
| 160 | 175 | | |
|---|
| 161 | 176 | | SEC. 5. Part 7 (commencing with Section 31520) is added to Division 5 of Title 4 of the Corporations Code, to read: |
|---|
| 162 | 177 | | |
|---|
| 163 | 178 | | ### SEC. 5. |
|---|
| 164 | 179 | | |
|---|
| 165 | 180 | | PART 7. FRANCHISE BROKERS31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective.31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner.31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158.31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state.31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner.31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand.31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made. |
|---|
| 166 | 181 | | |
|---|
| 167 | 182 | | PART 7. FRANCHISE BROKERS31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective.31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner.31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158.31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state.31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner.31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand.31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made. |
|---|
| 168 | 183 | | |
|---|
| 169 | 184 | | PART 7. FRANCHISE BROKERS |
|---|
| 170 | 185 | | |
|---|
| 171 | 186 | | PART 7. FRANCHISE BROKERS |
|---|
| 172 | 187 | | |
|---|
| 173 | 188 | | 31520. (a) A franchise broker shall register by filing online all of the following with the commissioner:(1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer.(2) Any additional documents or exhibits prescribed by the commissioner.(3) The required registration fee, as set forth in Section 31500.(4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain.(b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees.(c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective. |
|---|
| 174 | 189 | | |
|---|
| 175 | 190 | | |
|---|
| 176 | 191 | | |
|---|
| 177 | 192 | | 31520. (a) A franchise broker shall register by filing online all of the following with the commissioner: |
|---|
| 178 | 193 | | |
|---|
| 179 | 194 | | (1) A completed Uniform Franchise Broker Disclosure Document, as created and modified by the commissioner, that is signed and verified as true and correct by the filer. |
|---|
| 180 | 195 | | |
|---|
| 181 | 196 | | (2) Any additional documents or exhibits prescribed by the commissioner. |
|---|
| 182 | 197 | | |
|---|
| 183 | 198 | | (3) The required registration fee, as set forth in Section 31500. |
|---|
| 184 | 199 | | |
|---|
| 185 | 200 | | (4) Copies of financial securities and insurance policies the commissioner requires the franchise broker to obtain and maintain. |
|---|
| 186 | 201 | | |
|---|
| 187 | 202 | | (b) Subject to Section 31522, the registration shall be effective upon filing a complete application, including all required documents, and paying all applicable fees. |
|---|
| 188 | 203 | | |
|---|
| 189 | 204 | | (c) Subject to Section 31522, a registration pursuant to this section shall expire on December 31 of the year in which the registration became effective. |
|---|
| 190 | 205 | | |
|---|
| 191 | 206 | | 31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.(b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division. |
|---|
| 192 | 207 | | |
|---|
| 193 | 208 | | |
|---|
| 194 | 209 | | |
|---|
| 195 | 210 | | 31521. (a) A registered franchise broker shall promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker. |
|---|
| 196 | 211 | | |
|---|
| 197 | 212 | | (b) The commissioner may by rule further define what shall be considered a material change for those purposes, and the circumstances under which an amended Uniform Franchise Broker Disclosure Document must be filed. |
|---|
| 198 | 213 | | |
|---|
| 199 | 214 | | (c) The commissioner may issue a stop order pursuant to Section 31522 if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division. |
|---|
| 200 | 215 | | |
|---|
| 201 | 216 | | 31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.(b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect.(c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following:(1) Notice that the stop order has been issued.(2) The reasons for issuance of the stop order.(3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date.(d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.(e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions.(f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner. |
|---|
| 202 | 217 | | |
|---|
| 203 | 218 | | |
|---|
| 204 | 219 | | |
|---|
| 205 | 220 | | 31522. (a) The commissioner may summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division. |
|---|
| 206 | 221 | | |
|---|
| 207 | 222 | | (b) A franchise broker shall not offer or sell a franchise in this state while a stop order issued pursuant to subdivision (a) is in effect. |
|---|
| 208 | 223 | | |
|---|
| 209 | 224 | | (c) Upon issuance of a stop order, the commissioner shall promptly provide a notice to the franchise broker that contains all of the following: |
|---|
| 210 | 225 | | |
|---|
| 211 | 226 | | (1) Notice that the stop order has been issued. |
|---|
| 212 | 227 | | |
|---|
| 213 | 228 | | (2) The reasons for issuance of the stop order. |
|---|
| 214 | 229 | | |
|---|
| 215 | 230 | | (3) Notice that the matter will be set for hearing within 15 business days after the commissioner receives a written request for hearing from the franchise broker, unless the franchise broker consents to a later date. |
|---|
| 216 | 231 | | |
|---|
| 217 | 232 | | (d) The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing. |
|---|
| 218 | 233 | | |
|---|
| 219 | 234 | | (e) A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted under those provisions. |
|---|
| 220 | 235 | | |
|---|
| 221 | 236 | | (f) If the franchise broker does not request a hearing within 30 days after receipt of the notice required by subdivision (c), the stop order shall remain in effect until it is modified or vacated by the commissioner. |
|---|
| 222 | 237 | | |
|---|
| 223 | 238 | | 31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years. |
|---|
| 224 | 239 | | |
|---|
| 225 | 240 | | |
|---|
| 226 | 241 | | |
|---|
| 227 | 242 | | 31523. A registered franchise broker offering a franchise for sale in this state shall keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years. |
|---|
| 228 | 243 | | |
|---|
| 229 | 244 | | 31524. A registered franchise broker is subject to, and shall comply with, all of the following:(a) Section 31154.(b) Section 31155.(c) Section 31156.(d) Section 31157.(e) Section 31158. |
|---|
| 230 | 245 | | |
|---|
| 231 | 246 | | |
|---|
| 232 | 247 | | |
|---|
| 233 | 248 | | 31524. A registered franchise broker is subject to, and shall comply with, all of the following: |
|---|
| 234 | 249 | | |
|---|
| 235 | 250 | | (a) Section 31154. |
|---|
| 236 | 251 | | |
|---|
| 237 | 252 | | (b) Section 31155. |
|---|
| 238 | 253 | | |
|---|
| 239 | 254 | | (c) Section 31156. |
|---|
| 240 | 255 | | |
|---|
| 241 | 256 | | (d) Section 31157. |
|---|
| 242 | 257 | | |
|---|
| 243 | 258 | | (e) Section 31158. |
|---|
| 244 | 259 | | |
|---|
| 245 | 260 | | 31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part.(b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply:(1) The prospective franchisee resides in this state.(2) The prospective franchisee has its principal place of business in this state.(3) The franchised business will be located in this state. |
|---|
| 246 | 261 | | |
|---|
| 247 | 262 | | |
|---|
| 248 | 263 | | |
|---|
| 249 | 264 | | 31525. (a) It is unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part. |
|---|
| 250 | 265 | | |
|---|
| 251 | 266 | | (b) For purposes of this section, an offer or sale of a franchise is made in this state if any of the following apply: |
|---|
| 252 | 267 | | |
|---|
| 253 | 268 | | (1) The prospective franchisee resides in this state. |
|---|
| 254 | 269 | | |
|---|
| 255 | 270 | | (2) The prospective franchisee has its principal place of business in this state. |
|---|
| 256 | 271 | | |
|---|
| 257 | 272 | | (3) The franchised business will be located in this state. |
|---|
| 258 | 273 | | |
|---|
| 259 | 274 | | 31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.(b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner. |
|---|
| 260 | 275 | | |
|---|
| 261 | 276 | | |
|---|
| 262 | 277 | | |
|---|
| 263 | 278 | | 31526. (a) It is unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document. |
|---|
| 264 | 279 | | |
|---|
| 265 | 280 | | (b) A franchise broker may provide the Uniform Franchise Broker Disclosure Document to a prospective franchisee through electronic means, subject to any requirements or conditions imposed by the commissioner. |
|---|
| 266 | 281 | | |
|---|
| 267 | 282 | | 31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information:(a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following:(1) The types of sellers.(2) The franchise brokers role in the franchise sales process.(3) Services a franchise broker might provide.(4) Different ways a franchise broker might be compensated for its services.(5) Examples of questions a prospective franchisee might ask a franchise broker.(b) All of the following information about the franchise broker:(1) Legal name.(2) Trade name.(3) Year and state of formation.(4) Principal place of business.(5) Owners.(6) Directors and officers.(7) Contact information.(8) The franchise brokers broker network or franchise sales organization.(c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date.(d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years.(e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents.(f) A description of the services performed by the franchise broker.(g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated.(h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration.(i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand. |
|---|
| 268 | 283 | | |
|---|
| 269 | 284 | | |
|---|
| 270 | 285 | | |
|---|
| 271 | 286 | | 31527. For purposes of this part, the Uniform Franchise Broker Disclosure Document shall contain all of the following information: |
|---|
| 272 | 287 | | |
|---|
| 273 | 288 | | (a) A franchise broker cover page, as created and modified by the commissioner, that contains standardized language regarding franchise brokers, including, but not limited to, all of the following: |
|---|
| 274 | 289 | | |
|---|
| 275 | 290 | | (1) The types of sellers. |
|---|
| 276 | 291 | | |
|---|
| 277 | 292 | | (2) The franchise brokers role in the franchise sales process. |
|---|
| 278 | 293 | | |
|---|
| 279 | 294 | | (3) Services a franchise broker might provide. |
|---|
| 280 | 295 | | |
|---|
| 281 | 296 | | (4) Different ways a franchise broker might be compensated for its services. |
|---|
| 282 | 297 | | |
|---|
| 283 | 298 | | (5) Examples of questions a prospective franchisee might ask a franchise broker. |
|---|
| 284 | 299 | | |
|---|
| 285 | 300 | | (b) All of the following information about the franchise broker: |
|---|
| 286 | 301 | | |
|---|
| 287 | 302 | | (1) Legal name. |
|---|
| 288 | 303 | | |
|---|
| 289 | 304 | | (2) Trade name. |
|---|
| 290 | 305 | | |
|---|
| 291 | 306 | | (3) Year and state of formation. |
|---|
| 292 | 307 | | |
|---|
| 293 | 308 | | (4) Principal place of business. |
|---|
| 294 | 309 | | |
|---|
| 295 | 310 | | (5) Owners. |
|---|
| 296 | 311 | | |
|---|
| 297 | 312 | | (6) Directors and officers. |
|---|
| 298 | 313 | | |
|---|
| 299 | 314 | | (7) Contact information. |
|---|
| 300 | 315 | | |
|---|
| 301 | 316 | | (8) The franchise brokers broker network or franchise sales organization. |
|---|
| 302 | 317 | | |
|---|
| 303 | 318 | | (c) The franchise brokers professional experience during the last five years, including, but not limited to, employers, principal positions, each positions location, and the month and year of each positions start date and end date. |
|---|
| 304 | 319 | | |
|---|
| 305 | 320 | | (d) Administrative, civil, or criminal actions alleging that the franchise broker, or an owner, officer, or director of the franchise broker, violated any franchise, antitrust, or securities law, or committed fraud, unfair or deceptive practices, or similar violations, whether pending or resolved, within the last five years. |
|---|
| 306 | 321 | | |
|---|
| 307 | 322 | | (e) The industries of the brands the franchise broker represents and how many brands within each industry the franchise broker represents. |
|---|
| 308 | 323 | | |
|---|
| 309 | 324 | | (f) A description of the services performed by the franchise broker. |
|---|
| 310 | 325 | | |
|---|
| 311 | 326 | | (g) How the franchise broker is compensated, including, but not limited to, how the amount of any consideration the franchise broker receives is calculated. |
|---|
| 312 | 327 | | |
|---|
| 313 | 328 | | (h) Whether a broker network, broker organization, or franchise sales organization may receive any additional consideration. |
|---|
| 314 | 329 | | |
|---|
| 315 | 330 | | (i) The brands for whom the franchise broker sold a franchise anywhere in the United States or its territories during the last calendar year for which the franchise broker received or is entitled to receive compensation, including, but not limited to, the total number of units sold for the brand. |
|---|
| 316 | 331 | | |
|---|
| 317 | 332 | | 31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made. |
|---|
| 318 | 333 | | |
|---|
| 319 | 334 | | |
|---|
| 320 | 335 | | |
|---|
| 321 | 336 | | 31528. The implementation of this part is contingent upon an appropriation for its purposes by the Legislature in the annual Budget Act or other statute. This part shall become operative on the later of: (1) July 1, 2026, or (2) the first anniversary of the date on which the appropriation is made. |
|---|
| 322 | 337 | | |
|---|
| 323 | 338 | | SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. |
|---|
| 324 | 339 | | |
|---|
| 325 | 340 | | SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. |
|---|
| 326 | 341 | | |
|---|
| 327 | 342 | | SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution. |
|---|
| 328 | 343 | | |
|---|
| 329 | 344 | | ### SEC. 6. |
|---|