HB 2404 Summary

• Establishes comprehensive franchise regulation framework in Arizona by creating Chapter 41 of Title 44, Arizona Revised Statutes, applicable to franchises granted or renewed on or after January 1, 2024.

• Requires franchisors to provide franchisees with 60 days' notice and opportunity to cure noncompliance before termination, except in specific circumstances allowing immediate termination without cure period (bankruptcy, abandonment, criminal conduct, repeated violations).

• Mandates franchisors purchase inventory, equipment, and fixtures from franchisees upon lawful termination or nonrenewal at depreciated value, with limited exceptions.

• Prohibits franchisors from unreasonably preventing franchisee sales or transfers to qualified buyers, requires 180 days' notice before nonrenewal with opportunity for franchisee to sell business, and protects surviving spouses and heirs of deceased franchisees.

• Voids franchise agreement provisions that waive compliance with the chapter, restrict out-of-state venue, or prevent franchisees from joining trade associations; provides remedies including fair market value damages and injunctive relief for violations.