Assemblyman Scott Wilk’s AB 525, which protects the rights of small business franchise owners, passed the Assembly floor unanimously Monday.
“Although this bill does not completely balance the scales, it will prevent franchisees from losing their business for ‘ticky-tack’ violations that should not lead to termination—but do,” said Wilk, R-Santa Clarita. This bill begins to bring into balance the relationship between the small business owner and the corporate franchisor.”
AB 525 makes it more difficult for major chains to unfairly terminate their franchise operators. The measure will update the current vague and one-sided law to close loopholes and prohibit a corporation from closing a franchise business unless there has been a substantial violation of the contract, the law or local regulations. It also allows franchisees to keep the equity they invested in the event of termination and sell the business to a qualified new owner.
Wilk jointly authored AB 525 with Assembly Speaker Toni Atkins (D-San Diego), Assemblymembers Bill Dodd (D-Napa) and Assembly Majority Leader Chris Holden (D-Pasadena).
The bill now heads to the governor’s office where it awaits his signature.
Wilk’s 38th Assembly District encompasses Simi Valley, the northern section of the San Fernando Valley and most of the Santa Clarita Valley.