California Senate Passes Bill to Enhance Franchise Transparency

The California Senate passed Senate Bill 919, Entrepreneur reported. The bill, supported by both parties, aims to provide more information to prospective franchisees by enhancing disclosure requirements for third-party franchise sellers, including brokers and franchise sales organizations.

“This legislation provides greater clarity of the various parties engaged in the franchise sales process to prospective franchisees,” IFA President Matthew Haller said in a statement. “Responsible franchising includes improved disclosure and ultimately leads to stronger franchise relationships in the long term.”

The bill amends the California Franchise Investment Law (CFIL), mandating annual registration and pre-sale disclosures from third-party sellers, covering their professional background, litigation history, services and compensation.

Passed with a 36-1 vote, the bill now moves to the California Assembly. This initiative aligns with the IFA’s push for increased transparency in franchising to strengthen franchise relationships.