California Passes Landmark Franchise Disclosure Bill to Enhance Transparency and Consumer Protection - and the IFA Approves

The International Franchise Association (IFA) has praised the passage of California Senate Bill 919, a bipartisan measure aimed at enhancing transparency and consumer protection in franchise sales. Passed unanimously by the California Assembly and previously by the Senate, the bill now awaits Governor Gavin Newsom’s signature. Introduced by State Senator Thomas Umberg in January 2024, the legislation amends the California Franchise Investment Law (CFIL) to include third-party franchise sellers, such as brokers and sales organizations, under its disclosure requirements.

Key provisions of the bill mandate that these third-party sellers register annually and provide prospective franchisees with a detailed disclosure document. This document must include the seller’s contact information, professional experience, litigation history, compensation structure and details of franchises sold in the previous year. The IFA, along with the Coalition of Franchisee Associations (CFA) and the American Association of Franchisees & Dealers (AAFD), has been a strong advocate for this legislation, emphasizing its role in promoting due diligence and transparency in the presale process.

IFA President and CEO Matt Haller highlighted the increasing role of third-party sellers and described the bill as a significant advancement in consumer protection, potentially serving as a model for other states. Senator Umberg and other proponents, including CFA Chairman John Motta and IFA Board member Rob Branca, underscored the bill’s importance in ensuring prospective franchisees have the critical information needed to make informed decisions. Set to take effect on January 1, 2026, this legislation represents a crucial step forward in responsible franchising and consumer protection in California.

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