California franchise termination law: 60 days' notice and a cure period
What California's franchise relations chapter says about good cause, 60 days' notice, a cure period capped at 75 days, non-renewal and remedies.
California's statute says a franchisor may not end a franchise before its term expires except for good cause, and it limits good cause to a franchisee's failure to substantially comply with the lawful requirements of the franchise agreement. Before termination on that ground, the franchisor must give notice at least 60 days in advance and a reasonable opportunity to cure that is no shorter than 60 days from the date of the notice of noncompliance (Cal. Bus. & Prof. Code 20020).
The same section caps the cure period at 75 days unless the franchisor and franchisee separately agree to extend it. This page describes what the statute says in general. The notice a reader received and the franchise agreement control the reader's own dates, and a lawyer licensed in California can advise on them. For the general idea of a cure period, see franchise cure period explained.
Notice, cure and non-renewal at a glance
| Situation | What the statute says | Section |
|---|---|---|
| Termination for failure to comply | At least 60 days' notice; cure opportunity of at least 60 days from the notice; cure period not over 75 days unless separately agreed | 20020 |
| Termination on listed events | Immediate notice without a chance to cure is deemed reasonable | 20021 |
| Non-renewal | At least 180 days' prior written notice, plus one of several alternatives | 20025 |
| Inventory and equipment after lawful termination or non-renewal | Franchisor buys at price paid minus depreciation, with exceptions | 20022 |
Checked 28 October 2026. The statute has more detail than a table can hold.
Does the chapter cover a given franchise?
Chapter 5.5, titled Franchise Relations (sections 20000 to 20044), defines a franchise as a contract, written or oral, express or implied, under which the franchisee may sell goods or services under a marketing plan or system prescribed in substantial part by the franchisor, is substantially associated with the franchisor's trademark, and must pay a franchise fee (section 20001). Petroleum franchises under the federal PMPA and certain lease departments are excluded; see petroleum franchises and the PMPA.
The statute also has start dates. Per section 20041, the 2023 amendments apply to agreements entered into, amended or renewed on or after 1 January 2023, the 2016 amendments to those on or after 1 January 2016, and the original chapter to franchises granted or renewed on or after 1 January 1981. Whether a particular franchise falls inside these tests is for the reader or a California lawyer to check against the agreement. This page gives no verdict.
Events with no cure period
Section 20021 lists events for which immediate notice of termination, without an opportunity to cure, is deemed reasonable. The list includes bankruptcy or insolvency, abandonment (the statute describes failing to operate for five consecutive days), mutual agreement, material misrepresentation or conduct harming the system's reputation, failure for 10 days after notice to comply with law, repeat noncompliance, repeated failures, seizure or foreclosure, a felony or relevant criminal misconduct, and an imminent danger to public health or safety.
One entry is about money. The franchisee fails to pay franchise fees or other amounts due to the franchisor or its affiliate within five days after receiving written notice that they are overdue. Read section 20021 itself for the exact wording of each event. See also incurable defaults.
Non-renewal
A franchisor may not fail to renew a franchise unless it gives at least 180 days' prior written notice of its intention not to renew, and one of several alternatives applies (section 20025). One alternative is that, during the 180 days before expiry, the franchisor lets the franchisee sell the business to a purchaser who meets the franchisor's current requirements. Another is agreeing not to enforce a non-compete, where the refusal is not meant to convert the premises to company operation. The section lists further alternatives, including a termination allowed under 20020 or 20021, mutual agreement and market withdrawal. Read section 20025 for the full list. More on the topic: franchise non-renewal explained.
Remedies
Under section 20035, a franchisee who is wrongly terminated or not renewed is entitled to the fair market value of the franchised business and franchise assets plus other damages caused by the violation, and a court may grant preliminary and permanent injunctions for a violation or threatened violation. The text of sections 20035 to 20037 that was read contains no attorney fee clause and no limitation period. This page has not confirmed either, so a reader should ask a California lawyer about deadlines and not assume there is none. For how courts treat urgent relief, see preliminary injunctions and TROs.
Venue and arbitration clauses
Section 20040.5 says a provision restricting venue to a forum outside California is void for a claim arising under or relating to a franchise agreement involving a franchise business operating in the state. Section 20040 allows binding arbitration of chapter claims, if the standards applied are not less than the chapter's requirements, with arbitrators drawn from a list of impartial arbitrators supplied by the AAA or another impartial person. Whether a given arbitration clause meets that test is a question for a lawyer. Related reading: forum-selection clauses and arbitration clauses explained.
Questions to look for in your own notice and agreement
- What date is on the notice, and does it say it is a notice of noncompliance?
- Does it state a cure period, and is it measured from the date of the notice?
- Which requirement of the agreement does it say was not met?
- Does it rely on one of the section 20021 events instead of a cure period?
- What date does the agreement say the term expires, and was a non-renewal notice sent 180 days before it?
- Does the agreement name a venue outside California or an arbitration provider?
Where this came from
- Cal. Bus. & Prof. Code 20001 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20020 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20021 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20022 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20025 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20035 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20040 and 20040.5 (checked 28 October 2026).
- Cal. Bus. & Prof. Code 20041 (checked 28 October 2026).