Franchise Termination and Nonrenewal Under the California Franchise Relations Act

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

The California Franchise Relations Act bars a franchisor from terminating a franchise before its term ends except for good cause. For agreements signed or renewed since January 1, 2016, good cause generally requires written notice at least 60 days in advance and at least 60 days to cure. (Bus. & Prof. Code, § 20020.) A notice that allows only 30 days may not comply unless an older version governs or a ground for immediate termination applies. Kolmogorov Law, P.C. litigates franchise disputes for franchisees and franchisors.

Call (909) 235-6116 or contact us online to discuss a notice of default, termination, or nonrenewal.

Which version of the Act governs your agreement

The termination and remedy sections were rewritten effective January 1, 2016. The current text applies to agreements entered into or renewed on or after that date, and to franchises of indefinite duration that either side may end without cause. (Bus. & Prof. Code, § 20041, subd. (b).) Under the earlier text, good cause included a failure to comply after notice and a reasonable opportunity to cure that need not exceed 30 days. The remedy for a wrongful termination was an offer to repurchase resalable current inventory. (Former Bus. & Prof. Code, §§ 20020, 20035.)

Further amendments took effect January 1, 2023, for agreements entered into, amended, or renewed on or after that date. An amendment the franchisee initiated, with no substantial adverse effect on its rights or obligations, does not trigger them. (Bus. & Prof. Code, § 20041, subd. (c).)

Our guide to California franchise disputes gives the wider picture.

Franchise termination in California for cause: notice and cure

Under the current text, good cause is limited to the franchisee's failure to substantially comply with the lawful requirements of the agreement. The franchisor must give notice at least 60 days before termination and a reasonable opportunity to cure. That opportunity can never be less than 60 days from the notice, and it cannot exceed 75 days unless the parties separately agree to extend it. (Bus. & Prof. Code, § 20020.)

The notice must be in writing and posted by registered, certified, or other receipted mail, delivered by telegram, or personally delivered. It must state the intent to terminate, the reasons, and the effective date. (Bus. & Prof. Code, § 20030.)

A contract term purporting to waive compliance with the Act is void, so a shorter contractual cure period does not displace the statutory minimum. (Bus. & Prof. Code, §§ 20010, 20020.)

The grounds for immediate termination

Section 20021 lists events for which immediate notice of termination, with no opportunity to cure, is deemed reasonable. The event must be relevant to the franchise.

An order for relief in bankruptcy, a judicial determination of insolvency, an assignment of all or a substantial part of the assets for the benefit of a creditor, or an admitted inability to pay debts as they come due.
Abandonment: not operating for five consecutive days when operation is required, or a shorter period in some circumstances, unless the cause is fire, flood, earthquake, or a similar event beyond the franchisee's control.
A written agreement to terminate.
Material misrepresentations in acquiring the franchise, or conduct that reflects materially and unfavorably on the system.
Failure, for 10 days after notice, to comply with a law that applies to the operation.
Repeating the same noncompliance after curing it, or repeatedly failing to comply with the agreement, whether or not corrected.
Seizure or foreclosure of the business or its premises, on stated conditions.
Conviction of a felony or other criminal misconduct relevant to the operation.
Failure to pay franchise fees or other amounts due to the franchisor or its affiliate within five days after receiving written notice that they are overdue.
A reasonable determination that continued operation will create an imminent danger to public health or safety.

(Bus. & Prof. Code, § 20021, subds. (a)-(k).)

Nonrenewal: 180 days' notice and one of six conditions

A franchisor may not fail to renew unless it gives at least 180 days' prior written notice and one of these conditions is met. (Bus. & Prof. Code, § 20025.)

The franchisee may sell the business during those 180 days to a buyer who meets the franchisor's current requirements.
The refusal is not meant to convert the premises to company operation, and the franchisor agrees not to enforce any covenant not to compete.
Termination would be permitted under section 20020 or 20021.
The parties agree not to renew.
The franchisor withdraws from franchising in that market, on stated conditions.
The parties fail to agree on changes that match the renewal terms the franchisor customarily grants.

A franchisor that is late with the notice may offer, before the current term expires, a limited extension of the term to satisfy the 180 days. (Bus. & Prof. Code, § 20026.)

Remedies and the buyback

Under the current text, a franchisee terminated or not renewed in violation of the Act is entitled to the fair market value of the franchised business and franchise assets, plus any other damages the violation caused. A court may grant preliminary and permanent injunctions. (Bus. & Prof. Code, § 20035.)

After a lawful termination or nonrenewal, the franchisor must buy, at the price paid minus depreciation, the inventory, supplies, equipment, fixtures, and furnishings purchased under the agreement from the franchisor or its approved suppliers. (Bus. & Prof. Code, § 20022, subd. (a).)

Personalized items and items not reasonably required for the business are excluded. The franchisee must be able to deliver clear title and possession. Items sold after the notice are left out. No buyback is owed when the franchisee declines a bona fide renewal offer, is not prevented from keeping control of the principal place of the franchise business, or agrees in writing to end the franchise. (Bus. & Prof. Code, § 20022, subds. (b)-(g).)

The franchisor may offset what the franchisee owes. Under the 2023 amendments, it may do so only if the franchisee agrees to the amount or a final adjudication fixes it. (Bus. & Prof. Code, § 20022, subd. (h).)

If you are the franchisee holding a notice

Record how and when the notice arrived.
Identify the ground, the cure period given, and the governing version of the statute.
Cure what can be cured, in writing, and dispute the rest in writing.
Answer an overdue notice at once, even if the charge is disputed.

If you are the franchisor preparing to act

Confirm the agreement date, renewals, and amendments.
Name the statutory ground and the facts in the notice, and use a listed delivery method.
Allow the full cure period, and calendar the 180 days for any nonrenewal.

What to bring to the first meeting

The franchise agreement with every amendment and renewal.
Each notice, with proof of how and when it was delivered.
Cure correspondence, payment history, and inspection reports.

Frequently asked questions

My franchisor sent a notice of default and says it will terminate in 30 days. What protections do California franchisees have?

For an agreement signed or renewed since January 1, 2016, the California Franchise Relations Act requires good cause, written notice at least 60 days before termination, and at least 60 days to cure. Thirty days is enough only if an older version of the statute governs or a ground for immediate termination applies.

We are a franchisor and one franchisee keeps curing the same default and then repeating it. Do we have to give another 60 days?

Probably not. Under the California Franchise Relations Act, immediate notice of termination is deemed reasonable when a franchisee cures a failure and then repeats the same noncompliance, or repeatedly fails to comply with the agreement, whether or not corrected. State that ground in the written notice.

What is good cause to terminate a franchise in California?

Under California Business and Professions Code section 20020, good cause is limited to the franchisee's failure to substantially comply with the lawful requirements of the franchise agreement after notice and an opportunity to cure. Section 20021 adds a list of events, including insolvency, abandonment, and repeated defaults, that permit immediate termination.

How much notice is required for franchise nonrenewal in California?

At least 180 days' prior written notice, and notice alone is not enough. California also requires one of six statutory conditions, such as allowing the franchisee to sell the business during those 180 days. The notice must state the reasons and the effective date.

What does a franchisor have to buy back after a California franchise ends?

After a lawful termination or nonrenewal, California requires the franchisor to buy the inventory, supplies, equipment, fixtures, and furnishings the franchisee bought under the agreement from the franchisor or its approved suppliers. The price is what was paid, minus depreciation. Exceptions apply, including when the franchisee declines a bona fide renewal offer.

Talk to a California franchise dispute attorney

If a notice has arrived, or you are preparing to send one, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is in Irvine, California.

This page provides general information about California law and is not legal advice. Outcomes depend on the agreement, its dates, the facts, and the court or arbitrator.