Wrongful termination, cure rights, and non-renewal challenges under California franchise law.
When a franchisor terminates your franchise or refuses to renew, your livelihood is at stake. California law provides significant protections - but you must act quickly and strategically to preserve your rights.
Time-sensitive: If you've received a termination or non-renewal notice, you likely have limited time to respond and cure. Consult an attorney immediately - don't wait until the deadline passes.
Legal Framework
California Franchise Relations Act (Bus. & Prof. Code § 20000 et seq.)
§ 20020: Franchisor cannot terminate without "good cause." Good cause includes franchisee's failure to comply with lawful requirements after written notice and reasonable opportunity to cure (except for certain egregious violations).
§ 20025: Franchisor must give written notice of termination at least 60 days before effective date, and must state all reasons for termination.
§ 20027: Franchisor must give at least 180 days written notice before non-renewal, unless franchisee has been given at least one year to operate or specific exceptions apply.
§ 20035: Franchisor must fairly compensate for inventory, supplies, equipment when terminating or refusing to renew.
Good Cause Issues
Nonpayment of royalties despite cure opportunity
Multiple, repeated violations of standards after notice
Abandonment, bankruptcy, criminal conviction for franchise-related offense
Immediate termination allowed for certain egregious acts (felony, threats, counterfeit goods)
Common Termination & Non-Renewal Disputes
Default Notices
Short cure periods (10-15 days) that are unreasonable for required actions
Multiple overlapping notices designed to exhaust franchisee
Alleged violations already cured but notice not withdrawn
Selective Enforcement
Franchisor terminates one franchisee for minor issues while others with the same issues remain untouched
Retaliation for joining a franchisee association or speaking out
Non-Renewal Tactics
Offered renewal on materially different terms designed to force rejection
Non-renewal is pretext for recapturing profitable location
In urgent situations, you may need to seek a temporary restraining order (TRO) or preliminary injunction to prevent termination while litigation proceeds. Courts consider:
Likelihood of success: How strong is your case?
Irreparable harm: Will you lose your business, employees, customers if not enjoined?
Balance of hardships: Does harm to you outweigh harm to franchisor from delay?
Public interest: Impact on employees, customers, competition
Arbitration alert: Many franchise agreements require arbitration. You may still be able to seek emergency injunctive relief in court, or emergency relief from the arbitrator. Check your agreement carefully.
What's At Stake
In a wrongful termination case, damages may include:
Lost profits for remaining term (and renewal periods)
Value of business goodwill destroyed
Unrecovered investment in build-out, equipment, inventory
Forced sale losses if required to sell assets quickly
Attorneys' fees (if contract or statute provides)
Demand Letter Templates
Response to Termination Notice
"I am in receipt of your termination notice dated [date], which alleges [summarize stated grounds].
I dispute that good cause exists for termination under the California Franchise Relations Act, Business and Professions Code § 20020, for the following reasons:
[Choose applicable:]
1. The alleged violations have been cured. As documented in my letters dated [dates], I have [describe cure actions]. Attached please find [evidence of cure - receipts, photos, inspection reports].
2. I was not given reasonable opportunity to cure. Your notice demands cure within [X] days, which is insufficient time to [complete required action]. I request an extension to [date] to complete the necessary corrections.
3. The alleged violations are pretextual. The true reason for this termination appears to be [describe - e.g., franchisor's desire to recapture this profitable location / retaliation for my involvement in the franchisee association / my refusal to sign the new franchise agreement with materially worse terms].
4. The notice fails to comply with statutory requirements. [Describe deficiency - inadequate notice period, failure to state all reasons, etc.]
I demand that you:
- Withdraw the termination notice
- Allow me to continue operating under the Franchise Agreement
- Confirm in writing that my franchise remains in good standing
If you proceed with this wrongful termination, I will seek all available remedies including injunctive relief to prevent termination, damages for lost profits and investment, and attorneys' fees."
Cure Notice Response
"I am in receipt of your default notice dated [date], alleging [summarize violations].
I take compliance seriously and have taken the following corrective actions:
1. [Violation 1]: [Describe specific cure action, date completed, evidence]
2. [Violation 2]: [Describe specific cure action, date completed, evidence]
3. [Violation 3]: [Request extension if needed, with specific timeline and reason]
Please confirm in writing within 10 business days that:
(a) The above items have been cured to your satisfaction; and
(b) My franchise is in good standing.
If you believe any items remain uncured, please specify in detail what additional actions are required. I am committed to full compliance with the Franchise Agreement and will address any legitimate concerns promptly."
Non-Renewal Challenge
"I am in receipt of your non-renewal notice dated [date], received on [date].
This non-renewal violates the California Franchise Relations Act for the following reasons:
[Choose applicable:]
1. Inadequate notice: Business and Professions Code § 20027 requires at least 180 days written notice before non-renewal. Your notice provides only [X] days. The non-renewal is therefore void, and I am entitled to renewal under the existing terms.
2. Pretextual non-renewal: The non-renewal offer includes materially different terms that are designed to be unacceptable, including [describe - higher royalties, reduced territory, unreasonable renovation requirements, removal of renewal rights]. This constitutes a constructive refusal to renew.
3. Discriminatory treatment: Other franchisees in similar circumstances have been offered renewal on standard terms. [Provide examples if known.]
I have operated this franchise profitably for [X] years, maintained the brand standards, and invested over $[amount] in this location. I demand renewal on the same material terms as my current agreement, or on the standard terms offered to other renewing franchisees.
If you refuse to renew in good faith, I will pursue all available remedies including damages for my lost investment and going-concern value."
👥 When to Hire a Franchise Termination Attorney
Franchise termination and non-renewal disputes are high-stakes situations that can destroy years of investment. The California Franchise Relations Act provides strong protections, but only if you act quickly and correctly.
✅ May Handle Yourself When:
Minor default notice for easily curable issues (signage, hours, etc.)
Franchisor is communicating in good faith about resolution
You have time to cure and the requirements are clear
Simple documentation requests or compliance verification
Routine renewal negotiations without adverse term changes
Early-stage informal discussions about performance concerns
⚠️ Hire an Attorney When:
You received a formal termination or non-renewal notice
Cure period is unreasonably short (under 30 days for significant issues)
You believe termination is pretextual or retaliatory
Franchisor is trying to recapture your profitable location
Renewal terms are materially worse than current agreement
You need emergency injunctive relief to prevent termination
Your franchise investment exceeds $100,000
Franchisor is treating you differently than other franchisees
You're considering arbitration or litigation for damages
📊 Not Sure If You Need an Attorney?
Franchise termination is time-sensitive. Every day without legal guidance may limit your options. Our free assessment helps you understand your rights and the urgency of your situation.