California Franchise Investment Law Bond

How much does a franchise investment law bond cost in California?

The Department of Business Oversight requires franchise investors in California to execute surety bonds before conducting business. The amount of the surety bond varies based on the origination activities conducted by the licensee in the preceding calendar year. Applicants should verify their required bond amount with the state prior to bonding.

Because the required amount and, therefore, the price of these bonds vary so much, we recommend submitting a bond request to receive your free, no-obligation bond quote!

Why do I need this bond?

By posting a California franchise investment law surety bond, principals (franchise investors) and their agents and employees pledge to conduct business in accordance with the provisions of the Franchise Investment Law and all rules and regulations made by the Commissioner of Business Oversight. If the principal fails to comply with these terms, the bond protects the state and any person or persons who suffer financial loss as a result of the principal’s violation(s) up to the full amount of the bond. The principal must reimburse the surety for all damages paid out.

What’s the fine print?

Franchise investment law bonds in California remain in full force and effect until canceled or violated. The surety can cancel this bond by delivering written notice of cancellation to the Commissioner of Business Oversight at least 30 days prior to the effective termination date.

How to become a franchise investor in California

Franchisers in California must first register with the Department of Corporations before conducting business. The following materials should be included in a complete registration application:

• Application cover page
• Supplemental information page
• Sales agent disclosure form
• Offering circular in UFOC format
• Customer authorization form
• $675 registration fee

See the Additional Resources section on this page for more information on franchise investment registration. The registration expires 110 days after the date of the franchiser’s next fiscal year. At that point, the franchiser must send in a franchise renewal application. Renewals should be in the same format as the original application and cost $450. All applications should be submitted to the California Department of Corporations.

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Additional Resources

State of California - Department of Business Oversight Franchise Investment Law Bond form

California Department of Business Oversight

State of California Department of Corporations Guidelines for Franchise Registration

California Department of Business Oversight: Franchise Investment Law

California Department of Business Oversight Franchise Investment Law Forms and Applications