(a)Any person who offers or sells a franchise in violation of Section 31101, 31110, 31119, 31200, or 31202, or in violation of any provision of this division that provides an exemption from the provisions of Chapter 2 (commencing with Section 31110) of Part 2 or any portions of Part 2, shall be liable to the franchisee or subfranchisor, who may sue for damages caused thereby, and if the violation is willful, the franchisee may also sue for rescission, unless, in the case of a violation of Section 31200 or 31202, the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if they had exercised reasonable
care, would not have known, of the untruth or omission.
(b)(1)Any franchise broker who offers or sells a franchise in violation of Part 7 (commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisee, who may sue for damages caused thereby.
(2)Any franchise broker who offers or sells a franchise in violation of Part 7
(commencing with Section 31520) or Chapter 1 (commencing with Section 31200) of Part 3 shall be liable to the franchisor, who may sue for damages or may assert claims of indemnity against the franchise broker caused by the violation, including, but not limited to, indemnity for any damages awarded in connection with rescission awarded to the
franchisee.
Notes of Decisions
Keating v. Superior Court, 645 P.2d 1192 (Cal. 1982).
· cites it 2× “[11] While we have no evidence as to the policy reasons underlying that distinction, it may be that the Legislature considered arbitration more acceptable in the context of franchise relationships already established, presumably on the basis of proper disclosure, or that it…”
Meadows v. Dickey's Barbecue Restaurants Inc., 144 F. Supp. 3d 1069 (N.D. Cal. 2015).
“Plaintiffs first note that the CFIL entitles Plaintiffs to recover punitive damages, see Cal Corp. Code § 31300 et seq., but that the Dickey’s arbitration provision purportedly limits the recovery of punitive or exemplary damages, see Section 27.”
Samica Enter., LLC v. Mail Boxes Etc. USA, Inc., 637 F. Supp. 2d 712 (C.D. Cal. 2008).
· cites it 2× “A plaintiff must show both causation and actual reliance under the CFIL, see Cal. Corp.Code §§ 31300, 31301, and the statute reveals no appreciable disconnect between statutory and common law fraud— as that found under securities law.”
Dameshghi v. Texaco Refining & Mktg., Inc., 3 Cal. App. 4th 1262 (Cal. Ct. App. 1992).
· cites it 2× “Moving to the merits of Dameshghi’s claim, we first note that Corporations Code section 31006 defines a franchisee as “a person to whom a franchise is granted.”
Samica Enter. LLC v. Mail Boxes Etc., Inc., 460 F. App'x 664 (9th Cir. 2011).
“Appellants brought claims under the California Franchise Investment Law (“CFIL”) and common law fraud and misrepresentation, alleging that MBE and UPS made untrue statements of material fact and omitted material facts from various communications made in connection with the offer…”
Neptune Soc'y Corp. v. Longanecker, 194 Cal. App. 3d 1233 (Cal. Ct. App. 1987).
“(Corp. Code, § 31300.) There is ample evidence to support the trial court’s finding that the failure to register pursuant to Corporations Code section 31110 was a willful violation.”
Eastwood v. Froehlich, 60 Cal. App. 3d 523 (Cal. Ct. App. 1976).
“Section 31110 makes unlawful the offer or sale of any franchise in this state unless it has been registered or exempted from registration.”
Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165 (9th Cir. 1989).
“Avcar had to prove that DSPs franchise violations were “willful” in order to obtain rescission and damages under Cal.Corp. Code § 31300. The district court held that “ ‘willful’ means an act that is committed knowingly and intentionally.”
Paula Keller v. Golden Corral Franchising Sys., 359 F. App'x 716 (9th Cir. 2009).
· cites it 5× “Plaintiffs also filed a California Franchise Investment Law (“CFIL”) claim against Golden Corral under Cal. Corp.Code § 31300. The district court granted summary judgment to Golden Corral and RAI on all claims on the sole basis that Plaintiffs were required to show damages for…”
Stocco v. Gemological Inst. of Am., Inc., 975 F. Supp. 2d 1170 (S.D. Cal. 2013).
· cites it 3× ““GIA’s breach of duties and failure to disclose and provide the Plaintiffs a copy of the franchise offering circular was willful, and in addition to monetary damages is grounds for the Plaintiffs’ rescission of the franchise agreement pursuant to California Corporations Code §…”
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