California Civil Code Section 51.8 - Discrimination in the Granting of Franchises

California's Franchise Investment Law (FIL; Corp. Code, 31000 et seq.) governs the offer and sale of franchises and prohibits false or misleading disclosures in connection with the offer and sale of a franchise. (Corp. Code, 31201.) Any person who offers or sells a franchise in violation of specified provisions of the FIL is liable to the franchisee for damages. (Corp. Code, 31300.) However, the FIL protects only franchisees, "a person to whom a franchise is granted." (Corp. Code, 31006.) As a prospective purchaser of a Denny's franchise, Halloum lacks standing to sue under the FIL. (Dameshghi v. Texaco Refining & Marketing, Inc. (1992) 3 Cal.App.4th 1262, 1284-1285, disapproved on other grounds by Trope v. Katz (1995) 11 Cal.4th 274, 292.) Civil Code section 51.8 prohibits discrimination in the granting of franchises because of race, color, religion, sex, national origin, or disability. The plaintiff bears the initial burden of proving by a preponderance of the evidence a prima facie case of discrimination. Once the plaintiff establishes a prima facie case, an inference of discrimination arises. In order to rebut this inference, the defendant must present evidence of a legitimate nondiscriminatory reason. If the defendant presents such evidence, the burden shifts back to the plaintiff to prove the defendant's proffered reasons are a pretext for discrimination. (McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, 802-803; St. Mary's Honor Center v. Hicks (1993) 509 U.S. 502, 506-511.)