USA – CALIFORNIA Trends and Developments Contributed by: Dawn Newton and Hayley M. Lenahan, Donahue Fitzgerald
programme, CRM system or other data aggregation across all operating units in their system. The CCPA requires covered entities to allow Califor - nians: • the right to delete their information; • the right to correct information; • the right to access data and know how it was used; and • the right to opt out of the sale or sharing of infor - mation. It also restricts a covered entity’s ability to discrimi - nate based on exercise of privacy rights. Compliance with the CCPA requires franchise sys - tems to have heightened data privacy compliance including data handling and protocols throughout the franchise system, consistently maintained by both the franchisor and all franchisees. This can add additional hurdles for a franchisor getting a franchisee trained to operate a compliant business outlet. California Is Expensive California is well known as an expensive place to live and do business. Strict environmental laws, code enforcement and zoning restrictions can make it more difficult and expensive to engage in construction
than in many other states. California has a corporate income tax rate of 8.84% on corporations, which is one of the highest in the USA (S-corporations pay only 1.5% at the entity level and pass through other profits to the individual income tax level). Payroll taxes are uncapped, and insurance costs can be high, espe - cially in areas identified as prone to wildfire. Gas costs at least USD1 per gallon more than the national aver - age, and many other costs of operation are high as a result of high wages, gasoline and similar expenses. Conclusion The successful operator in California will study and understand the business and operational challenges in the state, and will engage appropriate personnel and advisers to maximise compliance and limit exposure to adverse claims. Franchisees will take advantage of workforce mobility and seek to hire experienced staff. In addition, franchisees will capitalise on busy and highly compensated Californians’ willingness to pay for services and convenience of all types, includ - ing restaurants, travel and hospitality, childcare, child tutoring, senior care, lawn and home care, medspas and more. Franchisors will craft their disclosure docu - ments carefully and will ensure that they are compliant in their filings and their ongoing performance, while taking advantage of numerous attractive franchise ter - ritories and prospective franchisees with high incomes and entrepreneurial goals.
116 FRANCHISING 2026
C HAMBERS.COM
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