Brian Schnell Addresses Potential California Franchise Broker Disclosure Requirements With Franchise Times

In “California Lawmakers Consider New Franchise Broker Disclosure Requirements,” Franchise Times turned to corporate partner Brian Schnell for insight on how franchise brokers and third-party sellers active in California would be required to register with the state’s Commissioner of Financial Protection and file a seller disclosure form if Senate Bill No. 919 becomes law.

Schnell noted prospective franchisees often interact more with the franchise broker in the early stages of the sales process than the franchisor itself and should have complete information upfront. “There are more third-party franchise sellers operating than ever before, he continued, “and it’s important to close any gap in the disclosure process.”

“I’m a big believer in franchise education,” said Schnell, who worked with the International Franchise Association on the bill’s language. “There’s a piece of the document intended to educate a prospective franchisee about the role of brokers and questions to ask in the process. We’re trying to move the needle on prospective franchisees having a better understanding of not just the franchise opportunity but also franchising generally.”

Schnell concluded that he expects more states to consider legislation similar to what’s being presented in California. The focus, he added, should be on disclosure “rather than regulating the franchise relationship.”