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My Franchisor is Not Registered in California, Can They Still Sue Me as a Franchisee in California?

Franchisors must register their franchise offering with the California Department of Business Oversight in order to sell franchises in California. If a franchisor was properly registered and properly sold a franchise, but has since become not registered (by not renewing its registration), this means that franchisor can not sell any future franchises in California. It does NOT mean they can not enforce a franchise agreement with an existing franchisee in California. Having said that, if a franchisor is incorporated out of state and failed to register to do business with the California Department of Corporations (and file California tax returns, and pay California taxes), then such company can NOT bring an action in California against its franchisee for any reason. California has laws to protect its citizens, and any company who is doing business in California, without properly registering its corporation or LLC, can not avail itself of the laws and protections afforded by the California Courts. Having a California located franchise IS doing business under California laws since that franchisee pays royalties or other fees, in exchange for the franchise, license and related services. If you are a California franchisee with an out of state franchisor threatening legal action, an experienced California Franchise Attorney, such as myself, can help you determine your rights and options.

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