California Code of Regulations
Title 10 - Investment
Chapter 3 - Commissioner of Financial Protection and Innovation
Subchapter 2.6 - Franchises
Section 310.156.1 - Standards Relating to Advertisements
Current through Register 2024 Notice Reg. No. 38, September 20, 2024
Any advertisement of a franchise should disclose fairly and accurately such relevant facts concerning the franchise, the terms and conditions thereof and the material rights and liabilities created thereunder as are necessary to make the advertisement not misleading. Normally, an advertisement should also comply with the following more specific standards:
(a) An advertisement should not contain any statement or inference that a purchase of a franchise is a safe investment or that failure, loss or default is impossible or unlikely, or that earnings or profits are assured.
(b) Earnings Claims must conform with Item 19 of the offering circular prescribed by the Uniform Franchise Registration Application, as defined in Section 310.111(b).
(c) Any advertisement which refers to the registration of the franchises under the Franchise Investment Law of the State of California shall contain in capital letters of not less than 10-point type the following legend:
"THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE COMMISSIONER OF BUSINESS OVERSIGHT NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING."
(d) An advertisement should normally contain the name and address of the person using the advertisement.
(e) If the advertisement contains any endorsement or recommendation of the franchises by any public figure, whether express or implied (for example, by the inclusion of such person's photograph or name in the advertisement), full disclosure shall be made of any compensation or other benefit given or promised by the franchisor or any person associated with the franchisor to such person, directly or indirectly. The disclosure required in this Subsection (e) shall be made in the same document containing the advertisement or, if such advertisement is presented on radio or television, as a part of the same program, without any intermission or other intervening material.
(f) Any advertisement which refers to an exemption from or reduction in taxation under any law should be based on an opinion of counsel, and the name of such counsel should be stated in the advertisement.
1. Amendment
filed 3-15-83; effective thirtieth day thereafter (Register 83, No.
12).
2. Amendment of subsection (b) filed 7-27-88; operative 8-26-88
(Register 88, No. 32).
3. Amendment of subsection (b) filed 4-6-94;
operative 5-6-94 (Register 94, No. 14).
4. Change without regulatory
effect amending subsection (c) and NOTE filed 8-13-2014 pursuant to section
100, title 1, California Code of
Regulations (Register 2014, No. 33).
Note: Authority cited: Section 31502, Corporations Code. Reference: Sections 31111 and 31156, Corporations Code.
