AB 2305 Summary

• Requires "good cause" for franchisor termination to consist of substantial and material breach of franchise agreement with 60 days written notice to cure, up from current 30-day requirement, and mandates termination comply with terms equally applicable to all franchisees.

• Eliminates existing nonrenewal provisions and establishes presumption that franchisors must renew franchises unless franchisee substantially and materially breached agreement; provides renewal under same terms or at franchisee's election under terms offered to new franchisees.

• Prohibits franchisors from enforcing non-compete covenants upon franchise termination or expiration and establishes remedies including reinstatement, damages, fair market value payment, injunctive relief, and attorney's fees for wrongful termination or nonrenewal.

• Expands Franchise Investment Law violations to include intentional misrepresentation of franchise success prospects, required investment, and market sustainability; extends civil liability to all violations, allows rescission without willfulness requirement, and increases statute of limitations to 4 years with 180-day notice period.

• Adds good faith dealing requirement, duty of competence, restrictions on territorial encroachment, limits on exclusive purchasing requirements, and protections for franchisee associations; voids provisions requiring application of non-California law or restricting venue to out-of-state forums.