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Lawletter No. 169 Dealer has five days to revoke agreement to franchise change California law gives any franchisee the right to revoke his consent to any material change in the terms of the franchise agreement within five (5) days after he signs it. Governing law: California Corporations Code section 31125(b), provides that the franchisor must deliver a copy of any proposed material modification of your franchise at least five business days prior to the date you sign it. The franchisor must also at that time deliver a written disclosure acknowledging your right to revoke your consent to the change or amendment within five business days after you sign it. Recommended procedures: For dealers who encounter the problem of a supplier insisting that an amendment to the franchise agreement be signed before they have had a chance to review the documents, we suggest the following procedures: (1) Do not be rushed: Never sign a document that you do not understand or have doubts about without seeking legal advice. There are no circumstances under which you have any legal obligation to sign any document an oil company rep. puts in front of you on the spot. Keep in mind that once you sign it, you are probably bound by its terms unless you exercise your 5-day revocation right. (2) Do not delay unnecessarily: If you do have questions about any aspect of a proposed franchise amendment, consult with your attorney as soon as is reasonably possible. Under the code, you are entitled to at least five business days to review it. (3) How to revoke: To revoke your consent to any change, send a notice via certified mail return receipt requested, within five business days of the date you signed the agreement. Clearly identify the document you are referring to. The best practice is to attach a copy. State you are revoking it pursuant to California Corporation Code section 31125(b). |
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