“I am returning Senate Bill 610 without my signature.” That is how California Governor Jerry Brown began his message to the State Senate. Monday the governor vetoed a bill that would have prohibited corporations from putting a franchisee out of business unless they have committed a “substantial and material breach” of the franchise agreement. The bill would also have protected a franchisee’s ability to sell or transfer a business.
Governor Brown wrote in his message that he is open to reforming franchise laws “if there are indeed unacceptable or predatory practices by franchisors.” But he said he needs a better understanding of the problem, and if there is a problem, to come up with a suitable solution.
Some franchisees and even some California lawmakers say problems already exist. However, the International Franchise Association and franchisors are publicly praising the governor’s veto. So it seems defining whether there is a problem isn’t the only issue here. In fact, Governor Brown’s message goes on to say that both sides have such differing views. He stated that it is in the best interest of the state for both sides to make a concerted effort to reach a collaborative solution.
It may be a tall order to get both parties in this battle to the same table. But for now, it appears if California is going to have any changes to its franchise laws that is exactly what is going to have to happen.