(a) On and after January 1, 1980, it shall be unlawful to include in any franchise agreement any term which provides for the termination of the franchise by the franchisor upon the death of the franchisee if the franchisee, prior to his demise, designates a successor-in-interest in a form prescribed by and delivered to the franchisor.
(b) For the purposes of this section, “successor-in-interest” shall be restricted to either a surviving spouse or adult child of the franchisee, provided that such spouse or child, at the time of the franchisee’s death, shall meet the reasonable qualifications then being required of dealers by the franchisor for the operation of such service stations.
(c) This section shall not apply to a “trial franchise” as defined in the Petroleum Marketing Practices Act (Public Law 95-297).
(d) The designated successor-in-interest shall be allowed 21 days after the death of the franchisee to give written notice of his or her election to assume and operate the franchise. The notification shall contain such information regarding business experience and creditworthiness as is reasonably required by the franchisor. The successor-in-interest must offer to assume the franchise in writing three days (excluding Saturdays, Sundays, and holidays) after such election and must commence operation of the franchise within 10 days after it has been assumed.
(e) Franchisors may require that franchisees desiring to designate a successor-in-interest pursuant to this section deposit with the franchisor at the time of such designation such sum as would be reasonably estimated to be necessary to compensate the franchisor for rent for a period of 21 days. This deposit is intended to compensate the franchisor in the event the designated successor-in-interest fails for such period after the death of the franchisee to assume the franchise obligation. Any unearned portion of such deposit resulting from the successor-in-interest assuming responsibility for the franchise sooner than 21 days after the date of the franchisee’s death, or from the temporary operation of the facility by the franchisor during such 21 days, shall be refunded by the franchisor to the estate or legal representative of the deceased franchisee. In addition to such deposit, the franchisor may require a franchisee desiring to qualify under this section to arrange for the discharge or performance of other franchise obligations such as, but not limited to, insurance, but excluding any obligation to be open to the public, for a period of up to 21 days after his demise.
(f) The franchise available to the successor-in-interest pursuant to this section is intended to be no greater than or less than the franchise as it existed in the name of the deceased franchisee at the time of such franchisee’s death. This section is not intended to expand or diminish the rights of franchisors or franchisees under either federal or state law.
(g) A franchisee may designate a primary and one alternate successor-in-interest. The alternate, if one is designated, shall have no rights under this section in the event of any exercise of rights by the primary successor-in-interest. If an alternate desires to assume and operate the franchise in the event the primary successor-in-interest fails to do so, the alternate must give notice of such election and otherwise comply with paragraph (d) of this section.
(h) Unless otherwise specifically provided herein, any actions to be performed by the franchisor or by the successor-in-interest hereunder shall in each instance be performed within a reasonable time.
(i) Unless the franchisor otherwise agrees in writing, there shall be no operation of the franchise following the death of the franchisee by anyone (other than the franchisor for its own account) until all parts of the franchise have been expressly assumed as herein provided, including, but not limited to, such items as lease or leases, products agreement, loaned equipment agreement, federal and state environmental law compliance agreements, licensing, and tax permits.
(j) Following the death of a franchisee, and prior to the operation of the franchise by the successor-in-interest as herein provided, the franchisor shall have the option to operate the franchise by contract or otherwise for its own account without obligation or duty to the heirs or estate of the deceased franchisee or to the successor-in-interest except for the obligation to account to the heirs or the estate of the deceased franchisee for the inapplicable portion of any prepaid rent or other sums prepaid to the franchisor, and for any physical inventory salvaged from the franchise and used or sold by the franchisor.
(k) If the successor-in-interest assumes the franchise and there has been no intervening operation of the franchise by the franchisor, the successor-in-interest shall account to the heirs or estate of the deceased franchisee for the value or other disposition of personal property of the franchisee located at or related to the franchise.
(l) The liability for failure to comply with this section shall be limited to those damages provided by Section 3300 of the Civil Code. Any action pursuant to this section shall be commenced within one year after the cause of action accrued.
(m) In the event any provision of this section is deemed void or unenforceable, the remaining portions, to the extent severable, shall be given effect.
(Added by Stats. 1979, Ch. 972.)
Last modified: October 25, 2018