200+ Free CA Franchise Specialist Practice Questions

You must be an active California Bar member in good standing for at least 5 years, demonstrate substantial involvement (25% of practice) in franchise & distribution law for the 5 years preceding application, complete qualifying franchise tasks (drafting FDDs, franchise agreements, registration filings, and handling franchise dispute matters), complete 45 hours of franchise-law CLE within the 3 years before applying, pass the CBLS uniform examination (75 MCQ + 8 essays with a 453 scaled passing score), and pass peer review by judges and attorneys familiar with your franchise work.

The exam uses the CBLS uniform format: a one-day exam combining 75 multiple-choice questions and 8 essay questions over approximately 8.5 hours. Topics tested are the FTC Franchise Rule (16 CFR Part 436), the California Franchise Investment Law (Corp. Code §31000 et seq.), the California Franchise Relations Act (B&P §20000 et seq.), antitrust law in franchising, trademark licensing, distribution and dealer laws, and franchise dispute resolution. The passing scaled score is 453. The exam is offered approximately every 2 years. Total fees are $359 application + $154 exam = $513.

The FTC Franchise Rule (16 CFR Part 436) defines a franchise federally as any commercial relationship with three elements: (1) the franchisee's business is associated with the franchisor's trademark; (2) the franchisor has or asserts significant control or significant assistance over the franchisee's operations; and (3) the franchisee is required to pay $500 or more within the first 6 months. If those elements exist, the franchisor must deliver a Franchise Disclosure Document (FDD) containing 23 prescribed items (Item 1 franchisor info, Item 7 estimated initial investment, Item 19 financial performance representations, Item 20 outlet/franchisee tables, Item 21 audited financials, Item 22 contracts, Item 23 receipts) at least 14 calendar days before the prospect signs any binding agreement or pays any consideration. Violations under 16 CFR 436.9 expose the franchisor to FTC enforcement under FTC Act §5; the Rule itself creates no private right of action.

The California Franchise Investment Law (Corp. Code §31000 et seq., CFIL) requires franchisors to register their offering with the Department of Financial Protection and Innovation (DFPI) under Corp. Code §31110 before offering or selling franchises in California, unless an exemption applies (§31100-31109 — large franchisor §31101, sophisticated franchisee §31106). CFIL imposes an anti-fraud requirement under §31201 prohibiting untrue statements or omissions of material fact in the offer or sale of a franchise. Civil liability under §31300 allows damaged franchisees to sue for rescission plus damages. Unlike the FTC Rule, CFIL provides a private right of action. CFIL also uses a slightly different franchise definition (Corp. Code §31005 — marketing plan + trademark + fee) that can capture some relationships the FTC Rule does not.

The California Franchise Relations Act (B&P Code §20000 et seq., CFRA) governs the ongoing franchise relationship. Under §20020, a franchisor may terminate a franchise only for 'good cause,' which the statute defines as the franchisee's failure to substantially comply with the lawful requirements of the franchise. Section §20021 generally requires 60 days' written notice of termination plus a 30-day opportunity to cure (cure period varies by violation type), unless one of the immediate-termination triggers in §20021(a)-(j) applies (insolvency, abandonment, repeated violations of the same type, criminal conviction). On termination or nonrenewal, §20035 requires the franchisor to repurchase the franchisee's resalable inventory, supplies, equipment, and furnishings. The 2015 AB-525 amendments added protections for franchisee transfers (§20028) and encroachment limits, and rebalanced damages remedies in favor of franchisees.

Common franchise antitrust issues include: (1) Tying claims — when a franchisor requires the franchisee to buy a separate 'tied' product as a condition of obtaining the franchised 'tying' product/trademark (analyzed under Eastman Kodak v. Image Technical Services and Queen City Pizza v. Domino's for aftermarket relevant-market questions); (2) Resale price maintenance — vertical price-fixing of franchisee resale prices, evaluated under the rule of reason after Leegin Creative Leather Products v. PSKS (2007); (3) Territory and customer restrictions — generally lawful as ancillary restraints; (4) Group boycotts among franchisees; (5) Robinson-Patman price discrimination between franchisees; (6) California Cartwright Act claims under B&P §16700-16770, which often track Sherman Act analysis but with broader state remedies. Franchisors must be especially careful with mandatory-supply provisions in California.