Franchise Brokers

Part 7 of Division 5 of Title 4 of the Corporations Code deals with franchise brokers under the California Franchise Investment Law.

Section 31520 requires a franchise broker to register by filing online four specified items with the commissioner. The registration is effective upon filing a complete application, including all required documents, and paying all applicable fees.

Section 31521 requires a registered franchise broker to promptly notify the commissioner in writing by an application to amend the registration of any material change in the information contained in the latest Uniform Franchise Broker Disclosure Document filed by the franchise broker.

The commissioner may issue a stop order if the commissioner finds that any of the material changes provided pursuant to this section constitute a failure to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.

Section 31522 allows the commissioner to summarily issue a stop order suspending or revoking any registration under this part if the commissioner finds that the franchise broker has failed to comply with any of the provisions of this division or any rule issued by the commissioner pertaining to this division.

A franchise broker cannot offer or sell a franchise in this state while a stop order is in effect. Upon issuance of a stop order, the commissioner must promptly provide a notice to the franchise broker that contains all of the specified items. The commissioner may modify, vacate, or extend a stop order until there has been a final determination of the matter at the hearing.

Section 31523 requires a registered franchise broker offering a franchise for sale in this state to keep and maintain a complete set of books, records, and accounts of that offer for a period of five calendar years.

Section 31524 requires a registered franchise broker to be subject to, and comply with, five specified code sections.

Section 31524 makes it unlawful for a franchise broker to offer or sell a franchise in this state unless the franchise broker is registered pursuant to this part. An offer or sale of a franchise is made in this state if any of three specified conditions apply.

Section 31526 makes it unlawful for a franchise broker to communicate with a prospective franchisee about investing in a franchise opportunity that is subject to registration pursuant to this division unless the franchise broker first provides to the prospective franchisee a copy of the completed Uniform Franchise Broker Disclosure Document.

Section 31527 requires the Uniform Franchise Broker Disclosure Document to contain all of the thirteen specified items of information.