Franchising 2026 Comparisons

California is the most populous state in the USA, with over 39 million residents, and is the third largest state by geographic size. In 2025, California’s gross domestic product (GDP) reached USD4.25 trillion, and it is home to some of the largest companies in the world. California’s median household income is approximately USD99,000. As a result, California is home to franchised business units from a significant portion of the franchise brands operating in the USA. Starbucks, Subway and McDonald’s each have over 1,000 franchised business outlets in California, and it is estimated that California has the second largest number of franchised business units in the USA, exceeded only by Texas.

California is also one of the most diverse states in the country. It has no single racial or ethnic majority group. As a result, a wide variety of businesses are popular in the state. Many international franchise systems operate in California, including:

• Jollibee, a Filipino fast-food concept;
• Paris Baguette and TOUS les JOURS, South Korean bakery-café concepts;
• Gong cha, a Taiwanese bubble tea concept;
• Bonchon, a South Korean fried chicken concept; and
• Haraz Coffee House, a Yemeni specialty coffee concept.

California was one of the first US jurisdictions to regulate franchising, creating the California Franchise Investment Law (CFIL) in 1970. Today, California has both the CFIL, a sales regulation, and the California Franchise Relations Act (CFRA), a relationship law.

The CFIL is enforced by California’s Department of Financial Protection and Innovation (DFPI) and also allows a private right of action. It requires franchisors to register their disclosure document with the DFPI prior to either offering or selling a franchise in the state. It also prohibits fraudulent practices, and these prohibitions apply equally to franchisors who may qualify for many exemptions from the registration requirement. Franchisors are also required to register their printed or targeted advertising materials at least three business days prior to using them. Non-targeted advertisements that are online, such as franchisor website pages promoting franchise opportunities, are not subject to the registration requirement.

The CFIL also requires franchise brokers to register, although the DFPI website notes as of September 2026 that the funding to support this requirement has not yet been secured, so the DFPI is not yet collecting broker registrations.

One of the most unusual provisions of the CFIL, compared to other state franchise laws, is the negotiated sales rule. In California, a franchisor is permitted to negotiate the terms of its franchise offer with prospective franchisees, but only if the franchisor subsequently discloses the terms it negotiated to subsequent California prospective franchisees for a period of 12 months. To comply with the negotiated sales condition, the franchisor must either file a Notice of Negotiated Sale of Franchise with the DFPI after each sale and provide copies of those Notices to future prospective franchisees, or provide a written appendix to future prospective franchisees of the modifications it has made in the prior 12 months.

The legislative intent of California’s negotiated sales rule is to enhance California franchisees’ power to negotiate with the franchisor, knowing the terms they have previously modified for others. However, the practical effect that is observed by practitioners is often that franchisors are less likely to negotiate in California than they are in other states where they will not be required to disclose their negotiations beyond what is required by the Federal Trade Commission (FTC) Franchise Rule.

An aggrieved franchisee can bring a claim under the CFIL for its damages and for rescission. Any person who engages in or materially aids in a violation of the CFIL is jointly and severally liable under the rule, and it is not unusual for civil suits to name franchisor executives individually, in addition to naming the franchisor entity.

The CFRA restricts a franchisor from terminating a franchisee without good cause and without an opportunity to cure, except in limited circumstances. Generally, a 60-day cure period is required, which can be extended to 75 days, although for monetary defaults a five-day cure period is sufficient. Among the exceptions to the requirement for a cure period are:

• an imminent threat to public health or safety;
• abandonment of operation of the franchised business for five or more consecutive days;
• repeated defaults; and
• franchisee misrepresentations in the acquisition of the franchise.

Under certain circumstances, termination will trigger an obligation for the franchisor to purchase inventory, supplies, equipment, furniture and fixtures that the franchisee purchased in connection with the operation of the franchised business.

The CFRA also restricts a franchisor’s right to refuse renewal to a franchisee. Franchisors must give 180 days’ prior written notice of an intent not to renew a franchise, and must also comply with certain other statutory conditions if they refuse to renew. A franchisor that realises it does not wish to renew a franchisee less than 180 days prior to the end of an existing franchise agreement may offer an extension of the existing franchise agreement term in order to provide the required 180 days’ prior written notice.

With respect to transfers, the CFRA enshrines a right for the surviving spouse, heirs or estate of a deceased franchisee to pursue qualifications sufficient to take over the deceased franchisee’s business. Franchisors are required to provide a “reasonable time” for such individuals to satisfy the franchisor’s then-current standards for franchise ownership, provided however that the franchisor may exercise a legal right of first refusal in the franchise agreement on its terms. Equally, the statute protects a franchisee’s right to transfer their business to a buyer who meets the franchisor’s then-current qualifications for ownership, provided that the seller and buyer comply with all other transfer requirements stated in the franchise agreement and that the franchisor is not prohibited from exercising any right of first refusal contained in the agreement.

Violations of the CFRA trigger civil liability, and an aggrieved franchisee’s damages are the fair market value of the franchised business plus any other damages the franchisee has suffered. The practical result of this is that a franchisor error in termination or non-renewal could trigger a claim for the entire value of the business, including all of its assets.

The CFIL contains one provision which might otherwise be part of a relationship law: it enshrines a right of franchisees to engage in free association and join a trade association. Franchisors are prohibited from penalising a franchisee for associating with other franchisees, and the inclusion of this provision within the CFIL means that the DFPI can investigate violations of this provision, unlike violations of the CFRA.

In California, a franchise exists when any agreement (including implied or oral contracts) contains three specific terms. First, it allows a licensee to engage in a business offering goods or services under a “marketing plan or system” identified in substantial part by the licensor. Second, the operation of the business is “substantially associated” with the licensor’s trade mark. Third, the licensee is required, directly or indirectly, to pay a “franchise fee”.

A franchise fee is any fee or charge that the franchisee pays for the right to engage in the business, other than the bona fide wholesale price of resaleable inventory or goods. It must exceed USD500 per year (total), or it qualifies for the de minimis exemption.

The CFIL requires franchisors to make a franchise disclosure to a prospective franchisee, except where an exemption applies to the transaction. The disclosure document must comply with the FTC Franchise Rule requirements and with California guidelines.

Regulations expressly permit issuance of the Franchise Disclosure Document (FDD) by electronic means, but require that the disclosure be delivered as a single, integrated document or file. The recipient must also be able to store, retrieve and print the document. A franchisor that divides the document into smaller files or includes links to external content such as its franchise sales website is not compliant.

The CFIL requires franchisors to provide prospective franchisees with the FDD and all proposed agreements at least 14 days before the franchisee signs a binding agreement or pays any consideration. A franchisor that sells a franchise without furnishing the required disclosure may be liable for damages. If the violation is wilful, the franchisee may also seek rescission of the franchise agreement.

Liability is not necessarily limited to the franchisor entity. Controlling persons, partners, principal executive officers and directors, and employees who materially aid in the violation may be jointly and severally liable unless they lacked knowledge or reasonable grounds to know of the facts giving rise to the violation.

The DFPI may also take enforcement action for violations of the CFIL. It can issue desist-and-refrain orders and impose administrative penalties of up to USD2,500 per violation. The Commissioner may also bring a civil action seeking penalties of up to USD10,000 per violation. Wilful violations can carry criminal penalties, including fines of up to USD100,000 and imprisonment.

California offers a number of exemptions from the registration and disclosure requirement under the CFIL. Some of these are niche or industry-specific, with exemptions for transactions related to a bank credit card plan and petroleum marketers.

Broadly Applicable Exemptions

Other exemptions are more broadly applicable. These are as follows.

An exemption for qualifying large franchisors (Section 31101)

An offer or sale is exempt if the franchisor, either alone or together with a qualifying parent, has a net worth of at least USD5 million based on audited financial statements and has at least five years of experience in conducting the same type of business, either directly or through at least 25 franchisees. The franchisor must provide prospective franchisees with an unregistered disclosure document containing the information specified by statute, and must file a notice with the DFPI prior to the offer or sale of franchises under this exemption each calendar year.

An exemption for the sale of a franchise to an insider

An offer or sale is exempt if owners of at least 50% of the prospective franchisee have at least 24 months of experience, within the prior seven years, in managing the financial and operational aspects of a business offering substantially similar products or services, and are not controlled by the franchisor. The exemption may also apply to the sale of an additional franchise to an existing franchisee with at least 24 months of experience in operating a substantially similar business.

An exemption for the sale of a franchise to an experienced franchisee

An offer or sale is exempt where owners holding at least 50% of the prospective franchisee are, or within the 60 days preceding the transaction were, an officer, director, managing agent or owner of at least a 25% interest in the franchisor, provided they held that position or interest for at least 24 months and are not controlled by the franchisor.

An exemption for a large franchisee

An offer or sale may be exempt if the purchaser meets specified financial and sophistication requirements, including certain entities with more than USD5 million in assets, individuals with more than USD1 million in qualifying net worth or specified income levels, and certain insiders. The purchaser must also have sufficient business and financial experience to evaluate the merits and risks of the investment.

An exemption for a fractional franchise

An offer or sale may be exempt if the franchise is added to an existing business that has operated for at least 24 months, offers substantially similar or related products or services, and will operate from the same location. The parties must also reasonably expect the franchise to generate no more than 20% of the franchisee’s annual sales.

Exemptions Not Requiring an Exemption Notice

There are also a few exemptions that do not require the filing of any exemption notice. These include the following.

An exemption for sales by the franchisor outside California

An offer or sale to a resident of another state, US territory or foreign country is exempt if all locations from which the franchised business conducts transactions with customers or distributes goods or services are physically located outside California.

An exemption for the offer but not the sale of a franchise while a timely filed renewal application is pending

A franchisor may continue to offer, but may not sell, franchises while a renewal or amendment application is pending with the DFPI. The prospective franchisee must receive the FDD filed with the pending application together with prescribed notice that the filing is not yet effective, and must receive the effective FDD reflecting any material changes at least 14 days before signing a binding agreement or paying consideration.

The CFIL also notes that the offer or sale of a franchise by a franchisee for its own account is not a franchise sale subject to the disclosure and registration requirement, provided that the franchisor does not engage in the sale other than to approve the buyer, and that a business operating as a non-profit co-operative is not a franchise arrangement.

The DFPI conducts business in English and requires that franchise disclosure documents be submitted to the agency in English. Translation into a language other than English is not required by any franchise laws in California. California Civil Code Section 1632 requires a written translation of certain consumer contracts that are negotiated “primarily” in Spanish, Chinese, Tagalog, Vietnamese or Korean. Because the statute generally applies to transactions entered into for personal, family or household purposes, it is unlikely to apply to most franchise agreements. However, Section 1632 also applies to the negotiation of leases and rental agreements for non-residential commercial spaces. Accordingly, if a franchisor leases premises to a franchisee and negotiates the lease primarily in one of the five covered languages, the franchisor may be required to provide the franchisee with a translation of the lease document in that language.

International franchisors should be aware that the DFPI requires franchisors to use US dollar figures in disclosure documents, and requires financial statements included in the disclosure document to be prepared in accordance with US generally accepted accounting principles (US GAAP). Franchisors that intend to calculate and collect fees in a currency other than the US dollar are required to convert their fees into US dollar for purposes of the disclosure document, noting the specific conversion rate used, although they may still collect the fees in another currency based on then-current conversion rates as long as their disclosure document clearly states that they will do so.

Except for exempt scenarios, a franchisor must register with the DFPI prior to offering or selling a franchise in California or to a California resident. An offer is defined as “every attempt to dispose or, or solicitation of an offer to buy…” (Section 31018). As a practical matter, this definition is broad and designed to prohibit a prospective franchisor from pre-negotiating the terms of a franchise offer with a prospect prior to securing its registration in California.

The DFPI franchise application process requires a franchisor to submit a complete copy of its FDD, together with application forms and related documents. The DFPI maintains a list of the requirements on its website, with clear instructions.

A typical application consists of:

• a cover letter – identifying the franchisor and, if applicable, the identification number the DFPI has previously assigned to the franchisor;
• a completed Uniform Franchise Registration Application form;
• certification and financial records authorisation – the certification page, signed by an authorised person on behalf of the franchisor and certifying that the contents of the application are accurate, together with the authorisation for the disclosure of financial records;
• consent to service of process – a completed Uniform Consent to Service of Process;
• supplemental information – the required supplemental information regarding the franchisor’s application in other states, the costs the franchisor expects to incur in establishing new franchises, and information about each sales agent who will participate in selling franchises on behalf of the franchisor;
• internet advertising notice – an internet ad exemption notice, if applicable;
• a clean copy of the proposed FDD;
• if applicable, a comparison copy of the FDD showing the changes between the proposed FDD and the prior year’s approved FDD; and
• a letter of consent from the franchisor’s auditor.

California franchise registrations expire 110 days after the end of the franchisor’s fiscal year. A franchisor must file a complete renewal application before that date to renew its registration; otherwise, it must file a new initial application. If a timely renewal is still pending when the existing registration expires, the franchisor may generally continue to offer, but not sell, franchises in California if it complies with Corporations Code Section 31107.

Under the FTC Franchise Rule, a start-up franchisor is permitted to use an unaudited financial statement in its first year. Many registration states reject this and require the franchisor to have an audit report in its first year of operation. California permits a start-up franchisor to present reviewed financial statements rather than a full audit in the first year. Thereafter, the franchisor must move to a standard audit.

Prior to filing for registration for the first time, franchisors should consider whether they have issued securities, such as stock or membership interests, to owners or investors in California. Corporations Code Section 25102(f) exempts certain limited, non-public offerings from California’s securities qualification requirement, but generally requires the issuer to file a Limited Offering Exemption Notice (LOEN) within 15 calendar days after the first sale of a security in California. These filings are frequently skipped in the entity formation phase because there is little penalty associated with not filing them; an issuer that discovers a missed filing generally has 15 business days to file, subject to a higher fee. DFPI regulators routinely investigate these filings and will require the filing to be completed as part of their comment if they believe any securities were sold in California.

A franchisor that is required to register and fails to do so violates the CFIL. Any franchisee who did not receive a registered FDD has the right to sue and seek rescission or other damages. If DFPI regulators learn of this, the DFPI will likely initiate an investigation of the franchisor. As part of its investigation, the DFPI typically requests information regarding the franchisor’s offers and sales over the preceding several years. The DFPI usually assesses a civil penalty of USD2,500 for each violation identified, although penalties of up to USD10,000 per violation may be imposed. The DFPI might also order the franchisor to offer rescission to the affected franchisees.

The DFPI generally learns of a violation in one of two ways. First, a regulator reviewing a franchise registration application might see in the filed documents, or in their own internet search, that the franchisor has existing business units that seem to be franchised but does not have a prior registration. Often, the regulator will ask further questions and request documents related to legal compliance. Second, the DFPI invites consumer complaints and in some instances a franchisee who believes they have been harmed by non-compliance will direct a complaint to the DFPI. If the DFPI agrees to investigate such a complaint, it will typically seek information about all franchisees who may have purchased a business when the franchisor was unregistered.

There is no requirement to demonstrate profitability in order to offer or sell franchises.

California does not require franchisors to demonstrate that a franchised business has operated profitably for any minimum period or at any minimum number of locations prior to the offer or sale of franchises. New systems are therefore free to register and sell franchises in California without an established record of profitability. Franchisees should exercise care and substantial diligence when investigating franchise opportunities that do not disclose financial performance and that do not have existing franchisees in the system who are willing to disclose their financial picture.

There is no required minimum or maximum franchise term.

Under the CFRA, a franchisor has a statutory protection against non-renewal but not an unconditional right to renew. A franchisor must provide at least 180 days’ written notice and satisfy one of the statutory grounds for non-renewal, including:

• allowing the franchisee an opportunity to sell the business;
• having grounds that would permit termination under the CFRA;
• withdrawing from the relevant market; or
• failing to reach agreement on renewal terms that are substantially consistent with those then being offered to similarly situated franchisees.

California does not provide a general right to goodwill compensation following a lawful non-renewal. However, the franchisor may be required to re-purchase certain inventory, supplies, equipment, fixtures and furnishings, and an unlawful non-renewal may expose the franchisor to liability for the fair market value of the franchised business and other damages.

California significantly restricts a franchisor’s ability to terminate a franchise agreement. Under the CFRA, a franchisor may not terminate a franchise before the expiry of its term except for good cause. Good cause is limited to the franchisee’s failure to substantially comply with the lawful requirements of the franchise agreement after receiving at least 60 days’ prior notice and a reasonable opportunity to cure. The cure period may not exceed 75 days unless the parties separately agree to an extension.

The CFRA also recognises circumstances in which a shorter cure period or immediate termination is permissible. These include:

• bankruptcy or insolvency;
• abandonment of the franchised business;
• material misrepresentations in acquiring the franchise;
• repeated defaults; and
• certain criminal conduct.

A franchisee that fails to pay amounts owed to the franchisor or its affiliate may be terminated if the amounts remain unpaid for five days after written notice, while certain violations of law are subject to a ten-day period following notice of non-compliance.

Lawful termination may also require a franchisor to re-purchase certain inventory, supplies, equipment, fixtures and furnishings purchased by the franchisee from the franchisor or its approved suppliers. However, this re-purchase obligation does not apply to personalised items, items not reasonably required to operate the franchise, or items for which the franchisee cannot convey clear title and possession. It also does not apply in specific circumstances, including where the franchisee declines a bona fide renewal offer, retains control of the principal business location or mutually agrees with the franchisor to terminate or not renew, or where the franchisor withdraws from all franchise activity in the relevant geographic market. A franchisor that terminates a franchise in violation of the CFRA may be liable for the fair market value of the franchised business and franchise assets, together with other damages caused by the violation, and injunctive relief may also be available (Section 20035).

Non-Compete Restrictions

California imposes broad statutory restrictions on non-compete agreements. Business and Professions Code Section 16600 provides that contracts restraining a person from engaging in a lawful profession, trade or business are void. The statutory exceptions are narrow and apply in connection with the sale of a business and its goodwill, the dissolution or dissociation of a partnership, or the dissolution of or termination of an interest in a limited liability company.

Section 16600 also applies in the commercial context.

In Ixchel Pharma, LLC v Biogen, Inc, 9 Cal 5th 1130 (2020), the California Supreme Court held that restraints between businesses are not automatically void but instead evaluated under the rule of reason. Under the rule of reason, courts consider the restraint’s actual effect on competition, including the parties’ market power, the scope of the restriction, and any legitimate business justifications for it. Accordingly, restrictions on a franchisee’s ability to compete during the term of a franchise agreement may be enforceable depending on their scope and overall effect on competition. However, in practice, franchisors are typically unsuccessful in enforcing any post-termination non-competition term against California franchisees.

Territorial and Exclusive-Dealing Restrictions

California’s Cartwright Act prohibits agreements that unreasonably restrain trade. In the franchise context, restrictions such as exclusive territories, exclusive dealing arrangements and certain purchase requirements are not unlawful simply because they limit how a franchisee may operate. Instead, the operative question is whether the restriction has a meaningful anti-competitive effect in the relevant market.

During the term of a franchise agreement, exclusive territories, and other restrictions on where or to whom a franchisee may sell, are generally permitted. These restrictions are typically evaluated under the rule of reason and are more likely to raise concerns where they substantially limit competition in the relevant market. The average franchise system will not encounter issues.

Purchase Ties

Franchise agreements may require franchisees to buy certain products or services from the franchisor, an affiliate or an approved supplier. These requirements are generally permissible, but they may raise antitrust concerns if the franchisor uses its market power to force the franchisee to buy a separate product or service as a condition of obtaining the franchise or another required product.

Franchisors are permitted to grant exclusive territories to California franchisees.

A franchisor may restrict a franchisee from operating a competing business during the term of the franchise agreement. Although these terms are still subject to California’s restrictions on unreasonable restraints of trade, franchisors are typically permitted to enforce these in-term prohibitions in order to protect their brand.

A franchisor may require a franchisee to purchase certain products and services only from the franchisor or its nominated suppliers.

A franchisor may reserve certain channels such as the internet to itself.

California does not extend a block exemption for franchise agreements or other vertical agreements comparable to the EU’s Vertical Agreement Block Exemption Regulation, nor is there a procedure for obtaining a franchise-specific exemption. Vertical restraints are generally evaluated under federal and California antitrust law.

Consistent with federal law, non-price vertical restraints, including exclusive dealing and territorial restrictions, are generally analysed under the rule of reason. This analysis considers the restraint’s effect on competition in the relevant geographic and product markets, including the parties’ market power, the extent to which competitors are foreclosed from market participation, and any legitimate business justifications for the restriction. In the franchise context, such restrictions may have pro-competitive benefits by promoting investment in the franchise system, protecting brand standards and promoting inter-brand competition.

A franchisor is not generally jointly or vicariously liable for the actions of their franchisees in California as long as the franchisee retains autonomy as a manager and employer. The fact that a franchisee must follow the franchisor’s operating system is not sufficient to establish control. Instead, courts consider the amount of control the franchisor has over the enterprise based on the totality of circumstances, including whether the franchisor has the characteristics of an employer or principal by making day-to-day business decisions or by hiring, directing, supervising, disciplining and discharging employees.

There may be narrow exceptions for certain claims when the “ABC test” is applied under Section 2750.3 of the Labor Code. This test was established to determine whether a party is an employee or an independent contractor under California law, but it has been applied to determine whether a franchisee or a franchisee’s employees are misclassified employees of the franchisor. Under the ABC test, a franchisor may be considered the “hiring party” of a worker unless the franchisor establishes that:

• (A) the worker is free from the control and direction of the franchisor in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• (B) the worker performs work that is outside the usual course of the franchisor’s business; and
• (C) the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

No information is available on this topic.

The franchisor is permitted to stipulate the laws of its jurisdiction as the governing law of the franchise agreement, though the protections of the CFIL and CFRA are not waivable and will continue to apply regardless of the law designated in the franchise agreement.

Other than the non-waivable laws that will protect the franchisee, the parties can specify any law they choose.

California does not require franchise agreements to contain prescribed wording. Instead, certain rights and obligations arise under the CFRA and CFIL regardless of whether they are stated in the agreement. Franchisors therefore commonly use a California-specific addendum to bring the agreement into line with these statutory requirements.

For example, the CFRA limits a franchisor’s ability to terminate or refuse to renew a franchise, restricts when a franchisor may withhold consent to a transfer, and gives the surviving spouse, heirs or estate of a deceased franchisee a reasonable opportunity to qualify to operate or transfer the business. In some circumstances, termination or non-renewal also requires the franchisor to re-purchase certain inventory, supplies, equipment, fixtures and furnishings from the franchisee.

These statutory protections apply even if the franchise agreement is silent or provides otherwise.

California does not have a single statutory blacklist of prohibited franchise agreement provisions. However, several types of provisions are void or unenforceable under California law.

California law prohibits a franchise agreement from requiring a franchisee to waive compliance with the CFIL or CFRA. California also forbids provisions that disclaim or deny representations made by the franchisor, the franchisee’s reliance on those representations or on the FDD, or violations of the CFIL. A franchise agreement may not require claims relating to a franchise business operating in California to be litigated exclusively outside the state. A franchisor also may not restrict or inhibit a franchisee’s right to associate with other franchisees or join a trade association.

A franchisor may not modify a franchise agreement or require a general release in exchange for assistance related to a declared state or federal emergency.

Non-compete provisions are subject to California’s restrictions under Business and Professions Code Section 16600, as discussed in 6.1 Treatment of Competition Restrictions in Franchise Agreements and 6.2 Exclusive Territories and Competing Businesses. Other franchise agreement provisions are unenforceable to the extent that they conflict with the mandatory protections of the CFRA discussed in 8.3 Mandatory Content.

A judgment from any court of another US jurisdiction may be enforced in California state courts by filing an Application for Entry of Judgment on Sister-State Judgment under the California Sister State Money-Judgments Act. An out-of-state federal judgment may be registered in a federal district court in California.

A money judgment from a court outside the United States may be enforced in California under the Uniform Foreign Money-Judgment Recognition Act, which requires the enforcing party to file an action to recognise the foreign money judgment. For arbitral awards, the United States codified the New York Convention in Chapter 2 of the Federal Arbitration Act.

There are no laws in California that specifically restrict franchise fees or royalty payments or that impose arbitrary limits on the fees that a franchisor can charge. That said, regulators at the DFPI strictly enforce the North American Securities Administrators Association’s Impact of Shifting Market and Economic Factors on Franchise Disclosures (2025) policy by requiring the franchisor to specify the formula or amount by which a fee can increase during the term for any fee that is described as variable.

There is no standard withholding tax specific to franchise fees or royalties in California. However, if the California Franchise Tax Board (FTB) concludes that an out-of-state franchisor must pay California income tax on the fees or royalties that the California franchisee pays, the franchisor can choose between registering in California and paying income taxes to the FTB itself or having the California franchisee withhold 7% on gross payments for all services in California. This would include royalties, initial franchise fees, training fees and similar brand-related service fees as well as gross rent payments.

Separately, as business operators, California franchisees are subject to state income tax obligations. Businesses organised in California will be subject to associated California fees, such as the minimum USD800-per-year fee for limited liability companies organised in California. These fees are the same for franchisees as for non-franchised businesses.

This topic is not applicable.

Signing the franchise agreement is simple and only requires that the franchisee (if a natural person) or the party authorised to bind the company (if a business entity) sign the agreement. No witness, notarisation or other process is required.

Electronic signatures are legal and commonly used.

This topic is not applicable.