Enlightened Franchisors Should Support The Statutory Duty of Good Faith In The Pending California Legislation.
The need for a statutory duty of good faith is to make clear that franchisors cannot attempt to negate the common law duty of good faith and fair dealing that already exists in most jurisdictions. Good faith and fair dealing is a minimal legal duty -- it is not a fiduciary duty, and it does not tie the franchisor's hands unfairly. No one should ever want to do business with someone who reserves to himself the supposed right to act in bad faith. Franchisor attorneys who try to reserve that right for their clients are hurting thefranchising business model and ultimately they are hurting their own clients. Current franchise agreements tend to be so one-sided that they scare away intelligent and well-capitalized individuals who might otherwise be attracted to franchising. Enlightened franchisors should get behind this effort to raise the bar on franchising "best practices."