Franchise Law Article

1. Overview and Purpose of Statute 
In 1980, the California Legislature passed another special franchise statute aimed at preventing certain unfair terminations of franchise relationships by franchisors. Under the statute a franchisee may not be terminated prior to the termination of the franchise agreement without good cause. 

2. Statutory Requirements
The Franchise Relations Act provides that no franchisee can be terminated without good cause prior to the expiration of the franchise agreement term. Good cause is defined to include any failure of the franchisee to comply with any lawful requirement. The statute provides additional details about certain breaches which allow for immediate termination of the franchise including: 

• insolvency government, seizure of assets or bankruptcy of the franchise business 
• conviction of a felony
• abandonment of franchise business for specified periods of time
• written agreement provisions, repeated breach of contract after notice, or failure to pay royalty fees
• misrepresentations in acquiring the franchise
• and reasonable concerns over public health and safety issues relating to franchise business