Several new or revised provisions of California's Franchise Investment Law that took effect recently are making life easier for franchisors that file registration applications in that State.

Among them is a new exemption from California's franchise registration and disclosure requirements for "experienced franchisees". Under Corp. Code § 31106, the offer and sale of a franchise to a franchisee who meets a minimum standard of recent experience in managing a similar business, to a recent officer, director, managing agent, or 25% shareholder of the franchisor, or of an additional franchise to an existing franchisee who meets certain requirements, is entitled to the exemption.

Another new provision exempts franchise offers and sales to non-residents whose franchises will be located and operated outside California.

Newly added Section 31107 gives a franchisor the right to give its most recent disclosure documents to a prospective franchise purchaser even though approval of the new documents, as part of an amendment or renewal application, is still pending with the Department of Corporations. Then, once the new documents have been registered, additional documentary information must be provided to the prospective franchise purchaser and a 10-business-day waiting period allowed to elapse, before the franchisor may permit the prospective franchisee to purchase the franchise.

California is the only franchise registration state that requires a franchisor to prepare and register a special disclosure document before it may enter into any material modification of an existing franchise with a California franchisee. A new amendment to Corp. Code §31125 narrows the statute's scope to some degree by excluding modifications that are made to settle bona fide disputes or to cure franchisee defaults.