When most people hear the words “franchise contract law” they assume that whatever follows either doesn’t apply to them or will have little to no consequences in their day-to-day life. Most of the time, they would probably be right—but not when it comes to California’s SB 610.
Right now, the state assembly is considering a bill that would rewrite California’s Franchise Relations Act. Once you cut through the legal jargon about requiring ambiguous language like “good faith” in contracts between franchised business owners and their parent corporations (or franchisors as they are called), SB 610 is all about brand standards. It is those standards that can have a big impact on consumers.
Brand standards are what ensure the same quality, menu, service, and price from one franchised restaurant, auto repair, salon, or store to another. As consumers, it is how we know exactly what to expect when we see a familiar logo on the door of a favorite restaurant or store. Business owners must sign contracts agreeing to uphold these brand standards before they can legally purchase a franchise outlet. In the world of franchised businesses, brand standards are everything.
SB 610 undermines the current law and puts those standards—and consumers—at risk. Under this legislation, if a chain restaurant or store fails to meet specific brand standards, the parent corporation they represent will have little to no recourse to do anything about it.
How exactly does this affect the Central Valley? It’s simple.
Chain store and restaurant owners operating in lower-income communities could see cutting corners as an easy way to increase profit margins—and under SB 610 they can legally get away with it despite signing a contract agreeing to uphold the same standards as other outlets in the chain.
Consumers could be subjected to anything from a more limited menu in some neighborhoods to higher prices, refusal to honor coupons and deals, lesser service, or lower quality products. The state of California and the parent corporation could do nothing to stop it.
As consumers, we depend on state laws to keep us safe and ensure we are treated fairly. SB 610 flies in the face of these consumer protection provisions. It makes possible a second-class of consumers based solely on a community’s income level. That’s called discrimination.
Lower income communities already struggle to attract basic businesses like restaurants, gyms, auto repair, and tax preparation services. We need our state legislators to give our franchised small businesses a boost, not waste time and taxpayer dollars on confusing and complex bills like SB 610.
The fact is California’s Franchise Investment Law works. There is no need for this legislation. It is redundant and unnecessary.
If we want to rebuild and strengthen California’s economy, we must include lower-income communities and the people who live and do business there. There is no place for legislation that further separates the “haves” from the “have nots.” On behalf of every community in Central Valley, we respectfully urge the state legislature to say no to SB 610.