Mass. Chapter 93A Claims Require Specific In-State Conduct
In order to state a viable Chapter 93A, § 11 claim, a plaintiff must make specific, factual allegations about the conduct that occurred primarily and substantially within the Commonwealth of Massachusetts, the U.S. District Court for the District of Massachusetts recently confirmed. In diversity action Crunchtime! Info. Sys., Inc. v. Frisch’s Rests., Inc., a restaurant software developer alleged breach of contract, breach of the implied covenant of good faith, and a Chapter 93A violation against a restaurant chain. Plaintiff, a Delaware corporation with a principal place of business in Massachusetts, provides software services to restaurants across the world. Defendant, an Ohio corporation with a principal place of business in Ohio, operates franchises primarily in the Midwest. Defendant moved to dismiss only the Chapter 93A violation for failure to state a claim.
Relevant here, the parties entered into an agreement where plaintiff agreed to provide software services to defendant’s restaurants in exchange for payment. The only allegations in the amended complaint that connected the conduct to Massachusetts was the existence of a principal place of business in the state and the fact that Massachusetts law governed the underlying contract. In assessing whether conduct occurs “primarily and substantially” within Massachusetts, the court must examine the context of the events that gave rise to the claim, and whether the center of gravity of those events occurred in Massachusetts. Because the amended complaint did not include any allegations elaborating on the specific facts that occurred in or related to Massachusetts, there was no basis to believe the conduct occurred primarily and substantially in the Commonwealth. Therefore, the claim was dismissed.
This case serves a reminder, especially for parties who do not normally practice in Massachusetts, to pay particular attention to the factual allegations related to the conduct giving rise to the claims and whether the center of gravity of that conduct occurred in Massachusetts.
Guidance for Franchisors: Lessons from N.A.R., Inc. v. Eastern Outdoor Furnishings
A recent New Jersey appellate court decision provides valuable guidance for franchisors and their in-house legal teams on structuring and protecting franchise relationships. The court affirmed that a terminated retailer of custom outdoor kitchens was not in a franchise relationship with a manufacturer of outdoor grills and that the New Jersey Franchise Practices Act (NJFPA) did not apply to the retailer’s termination. This case underscores the importance of clearly defining franchise relationships through written agreements to avoid unintended legal consequences.
Background of the Case
In N.A.R., Inc. v. Eastern Outdoor Furnishings, 2025 WL 287497 (N.J. Super. Ct. App. Div. Jan. 24, 2025), Eastern Outdoor Furnishings, a retailer of custom outdoor kitchens, had been selling AMD Direct’s outdoor grills since 2010 under a wholesale distributorship arrangement. In 2019, AMD terminated Eastern Outdoor’s distributorship in favor of a competitor. At the time, Eastern Outdoor had AMD grills in its possession that it had ordered but not yet paid for.
A collection agency, N.A.R., Inc., acting as an assignee of the purported debt, sued Eastern Outdoor to recover payment. In response, Eastern Outdoor filed a third-party complaint against AMD, alleging that the termination violated its franchise rights under the NJFPA. AMD moved for summary judgment, seeking dismissal of the franchise-related claims.
Key Legal Issue: Was There a Franchise Relationship?
The central legal question was whether Eastern Outdoor could establish a franchise relationship under the NJFPA, which requires proof of:
A written agreement granting the use of a trade name, trademark, service mark, or related characteristics.
A community of interest in the marketing of goods or services.
The trial court granted summary judgment in favor of AMD, ruling that Eastern Outdoor could not prove the existence of a written agreement meeting the first element of the NJFPA test. Eastern Outdoor appealed this decision.
Appellate Court’s Analysis and Affirmation
The appellate court upheld the trial court’s decision, concluding that Eastern Outdoor failed to demonstrate a written agreement establishing a franchise. Key takeaways from the appellate court’s ruling include:
A Franchise Agreement Must Be Evidenced in Writing: Eastern Outdoor argued that the NJFPA does not require a formal contract, asserting that a series of writings could constitute a franchise agreement. While the appellate court acknowledged that multiple documents could collectively establish a franchise, they must explicitly grant a license to use a trade name, trademark, or related characteristics.
Insufficient Evidence of a Granted License: Eastern Outdoor submitted various documents to support its claim, including:
Invoices.
An email referring to AMD and Eastern Outdoor as “trusted partners.”
AMD’s website listings identifying Eastern Outdoor as a distributor or Director of Sales.
Marketing materials, such as AMD catalogs labeled “Summerset…by Eastern Outdoor.”
A letter referencing the “distributor arrangement.”
Despite these materials, the appellate court found that they merely reflected the history of the business relationship and did not constitute a written grant of a trademark license.
Trademark Use Alone Does Not Establish a Franchise: Eastern Outdoor had used AMD’s branding and logos in selling its products, but AMD never explicitly granted Eastern Outdoor a license to do so in writing. The absence of this written license was a decisive factor in the court’s ruling.
Key Takeaways for Franchisors and Legal Departments
This case highlights several critical lessons for franchisors and their in-house legal teams:
Ensure a Clearly Defined Franchise Agreement: If a company intends to create a franchise relationship, a formal, written agreement granting trademark or trade name rights is essential to comply with franchise laws like the NJFPA.
Avoid Unintentional Franchise Designations: Manufacturers and suppliers should carefully structure distributor relationships to prevent claims of franchise status. If franchise laws do not apply, agreements should explicitly state that no franchise relationship exists.
Trademark Licensing Must Be Explicit: Even if a distributor uses branding and marketing materials, courts require clear, written evidence that a franchisor has explicitly granted such rights.
Monitor Business Descriptions and Communications: Informal references to “partners,” “distributors,” or sales directors on websites, emails, and marketing materials can be used as evidence in legal disputes. Franchisors should ensure that all representations align with the intended business relationship.
Understand State-Specific Franchise Laws: The NJFPA, like other state franchise laws, has specific requirements that differ from federal franchise regulations. Franchisors must ensure compliance with state laws in jurisdictions where they operate.
Conclusion
The N.A.R., Inc. v. Eastern Outdoor Furnishings decision reinforces the necessity for franchisors to properly document and define their relationships with retailers and distributors. In-house legal teams should take proactive steps to draft clear agreements, explicitly grant (or withhold) trademark rights, and carefully manage how business relationships are portrayed. By doing so, franchisors can mitigate legal risks and prevent unintended franchise claims under state laws like the NJFPA.
2025 Global Franchise & Supply Network Report
We are pleased to present our 2025 Global Franchise & Supply Network Report detailing key legal developments, strategies and insights into the evolving landscape of franchising, licensing, distribution and supply chain management. This report explores various topics, including:
FTC Franchise Rule amendments
Noncompete covenants
Considerations when merging franchise systems
Mediation trends
Considerations for Item 18 of the FTC Franchise Rule
California’s Franchise Investment Law
Recommendations to reduce misclassification, joint employment and vicarious liability risks
Resources
Read the full report
NASAA Supports Reasonable Post-Term Non-Competes in Franchise Agreements
Last year saw non-compete agreements come under repeated scrutiny from the Federal Trade Commission. On April 23, 2024, the FTC issued a final rule banning non-compete agreements in most employment contracts. That rule, which did not apply to non-compete provisions in franchise agreements between franchisors and franchisees, was subsequently struck down by a federal court in August 2024 and is now on appeal to the Fifth Circuit. Separately, on July 12, 2024, the FTC released an Issue Spotlight identifying post-term covenants not to compete in franchise agreements as one of the top 12 concerns of US franchisees. In the wake of the FTC’s various statements and actions, the North American Securities Administrators Association (NASAA)’s Franchise and Business Opportunities Project Group—a group of state franchise regulators—announced on January 27, 2025, its guidance on post-term non-compete clauses in the context of the franchise business model. The full text of the guidance can be found here.
NASAA’s guidance expressly recognizes that “[w]here authorized under applicable law, post-termination non-competes can serve useful purposes in the franchising context” and that “[s]ystem goodwill, customer relationships and protection of other franchisees” are legitimate business interests that may reasonably require protection through non-compete provisions. According to the guidance, a reasonable post-term non-compete in a franchise agreement requires a balancing of scope, territorial or market reach, duration and effect on the departing franchisee, weighing the interests of the franchisor, the existing franchisees in the system and the franchisee exiting the system.” NASAA concluded:
“Post-term non-competes should be narrowly drawn and reasonable in scope, duration and territory. In the current climate of increased judicial and legislative scrutiny of non-competes, the reasonableness inquiry becomes critical. When drafting or enforcing a post-term non-compete, a franchisor should consider both its position and the positions of existing franchisees and the franchisee leaving the system. Consistent with legal authority, franchisors should prepare a non-compete that reasonably protects the interests of the franchisor and existing franchisees yet allows the former franchisee to realize the value of its investment and experience in the franchised business.”
While largely summarizing the state of current non-compete law in many states, NASAA’s guidance may signal a new interest by state franchise examiners in scrutinizing post-term non-compete provisions in franchise agreements during the registration process. The guidance is thus a good reminder for franchisors to evaluate the reasonableness and compliance with applicable law of any non-compete provisions in their franchise agreements. This time of year, when many franchisors are in the process of updating their franchise disclosure documents and forms of agreement, is a good time for such review.
Navigating Non-Compete Agreements: Key Considerations for In-House Counsel in Franchise Businesses
In May of last year, the Federal Trade Commission (FTC) sought to ban non-compete agreements in most employment contracts. Franchise agreements were an exception. However, before the rule could take effect in September, a federal court vacated the ruling in August, asserting that the FTC lacked the authority to enforce such a regulation.
Following this setback, the FTC promptly filed a notice of appeal with the Fifth Circuit Court of Appeals, keeping the issue in legal limbo.
Franchisors should understand the implications of non-compete agreements is essential. While these clauses serve to protect franchisors’ proprietary interests, trade secrets, and system integrity, they also pose challenges for franchisees, who may perceive them as unfair restrictions on future business opportunities. Franchisees argue that post-term non-competes hinder their ability to leverage their experience and investment after exiting a franchise system, limiting market competition and personal livelihood. Conversely, franchisors maintain that such provisions are necessary to preserve brand integrity, protect franchisees who remain in the system, and safeguard proprietary business models.
NASAA’s Guidance on Franchise Non-Compete Agreements
Amid this ongoing legal and policy debate, on January 27, 2025, the Franchise and Business Opportunities Project Group—part of the North American Securities Administrators Association (NASAA)—issued guidance on post-term non-competes within franchise agreements. See https://www.nasaa.org/wp-content/uploads/2025/01/Post-Term-Non-Compete-Provisions-in-Franchise-Agreements-Should-Be-Reasonable.pdf. Their recommendations address several critical aspects of the franchisor-franchisee relationship:
1. The Uniqueness of Franchise Relationships
Unlike a traditional buyer-seller transaction, a franchise agreement grants a franchisee the right to operate a business using an established system for a defined period.
Franchisors grow their brand by leveraging franchisees’ investments rather than solely relying on their own capital.
2. Differing Expectations Between Franchisors and Franchisees
Franchisors seek to expand their system to strengthen brand value, market reach, and overall profitability.
Franchisees, as business owners, aim to maximize their autonomy, investment returns, and long-term viability.
3. End-of-Relationship Challenges
Divergent expectations often become most pronounced at the conclusion of the franchise relationship.
While franchisors enforce post-termination rights, franchisees may wish to utilize their experience and business acumen in new ventures.
4. What Constitutes a “Reasonable” Post-Term Non-Compete?
NASAA recommends that franchisors craft post-term non-compete agreements that are reasonable and clearly define legitimate business interests. Key considerations include:
Scope: Restrictions should apply only to competitive businesses directly related to the franchise system, avoiding overly broad limitations.
Duration: Non-competes should be limited to the time reasonably necessary to protect the franchisor’s business interests. While the appropriate timeframe varies across industries, agreements should avoid excessive restrictions.
Geographic Limitations: Any territorial restrictions should be as narrow as possible, potentially applying only to a specified radius around the franchise location or other branded outlets.
5. Compliance and Best Practices for Franchisors
Beyond restrictive covenants, franchisors should ensure that franchise agreements require the return of branding assets, including trademarks, trade dress, signage, and domain names, upon termination or expiration.
For in-house attorneys managing franchise agreements, these developments underscore the importance of periodically reviewing non-compete provisions to ensure compliance with evolving legal standards and industry best practices. Given the FTC’s ongoing legal battle and NASAA’s evolving stance, franchisors should consult experienced franchise counsel to assess whether modifications to existing agreements are warranted.
By staying proactive, in-house legal teams can help maintain a fair balance between protecting the franchisor’s business model and allowing former franchisees to pursue future opportunities within reasonable constraints.
DOJ and FTC Issue New Antitrust Employment Guidelines In The Last Days of the Biden Administration
On January 16, 2025, three days before President Trump’s inauguration, the Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ) jointly issued the Antitrust Guidelines for Business Activities Affecting Workers (the “2025 Guidelines”). The 2025 Guidelines, which do not have the force of law, explain how the agencies assess business practices affecting workers that may violate antitrust laws.
The 2025 Guidelines replace the 2016 Antitrust Guidance for Human Resources Professionals (the “2016 Guidance”). The 2016 Guidance provided principles and specific real-world examples to help HR professionals avoid running afoul of antitrust laws. The new guidelines address a wider range of business practices, including non-compete agreements and restrictions in the independent contractor and franchise settings, providing a non-exhaustive list of practices that may be unlawful:
Wage-fixing and no-poach agreements. Like the 2016 Guidance, the 2025 Guidelines state that agreements between businesses not to recruit, solicit, or hire workers (known as “no-poach” agreements) or to fix wages or terms of employment, may violate antitrust laws and lead to criminal prosecution.
Franchise no-poach agreements. The 2025 Guidelines extend the no-poach prohibition to the franchise context, explaining that agreements in which a franchisor and franchisee agree not to compete for workers may be subject to antitrust scrutiny.
Sharing sensitive information with competitors. The 2025 Guidelines reiterate that sharing information with competitors about terms and conditions of employment may be unlawful if the information exchange has, or is likely to have, an anticompetitive effect. Providing such confidential information through an algorithm or a third party’s tool or product may also be unlawful.
Non-compete agreements. Echoing the Biden-era FTC’s focus on non-compete agreements, the 2025 Guidelines state that non-compete clauses that restrict workers from switching jobs or starting a competing business can violate antitrust laws. The 2016 Guidance specifically declined to take a position on the validity of non-competes. Acknowledging the August 2024 court order setting aside the FTC rule banning most non-compete agreements, the new guidance stresses that the FTC retains the legal authority to address non-competes through case-by-case enforcement actions.
Other restrictive, exclusionary, or predatory employment conditions. In a catch-all category, the 2025 Guidelines provide that other restrictive, exclusionary, or predatory employment conditions, including certain non-disclosure agreements, training repayment obligations, non-solicitation agreements, and exit fee and liquidated damages provisions may violate antitrust laws.
Agreements with independent contractors. Another new principle in the 2025 Guidelines is that antitrust laws apply to agreements that businesses reach with independent contractors. The guidelines specifically cite the growth of app-based businesses that use independent contractors rather than employees to match workers with consumers seeking their services (i.e., gig economy relationships). An agreement between two or more competing platforms to fix the compensation of independent contractors offering their services via the platforms may constitute a per se violation of antitrust laws.
False earnings claims. Finally, the 2025 Guidelines state that the FTC and DOJ may investigate and take action against businesses that make false or misleading claims about potential earnings that workers may realize.
The future of the 2025 Guidelines is uncertain under the new administration. The FTC approved the guidelines by a 3-2 vote, with incoming FTC Commissioner Andrew Ferguson dissenting. In his dissenting statement, Ferguson called the FTC’s replacement of the 2016 Guidance “mere days before they hand over the baton … a senseless waste of Commission resources.” After the Senate confirms the third Republican Commissioner, the FTC may vote to rescind the 2025 Guidelines and either issue new guidance or revert to the 2016 Guidance, which was issued at the end of the Obama administration and remained in place during the first Trump administration.
While the specifics of the new administration’s antitrust policy remain to be seen, employers should review the business practices discussed in the 2025 Guidelines with employment and antitrust counsel to ensure they are appropriately tailored to achieve their purpose while minimizing harm to competition.
New Franchising Code to Commence in April
The Competition and Consumer (Industry Code – Franchising) Regulations 2024 (Cth) (the New Code Draft), which replaces the Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (the Old Code), is now in force and will commence on 1 April 2025. While it appears that the Australian Government has proceeded with many of the proposed changes that were contemplated in the Exposure Draft (see our previous update here), it is also important for franchisors to be aware that the New Code contains a number of transitional provisions.
When Does the New Code Apply?
The New Code will apply to:
Franchise agreements entered into, transferred, renewed or extended on or after 1 April 2025; and
Conduct engaged in on or after 1 April 2025 in relation to these agreements.
The Old Code will continue to apply to:
Franchise agreements entered into before 1 April 2025 until those agreements are terminated, transferred, renewed or extended; and
Conduct relating to those agreements that is engaged in on or after 1 April 2025 (other than conduct relating to the transfer, renewal or extension of those agreements).
However, there are some significant transitional provisions in relation to the application of aspects of the New Code which we have outlined below.
What is the Position in Relation to Compensation for Early Termination and Reasonable Opportunity for Return on a Franchisee’s Investment?
Two of the more significant changes introduced by the New Code are the placing of the following new obligations on franchisors:
A requirement under section 43 to provide some compensation to a franchisee in certain circumstances on early termination of a franchise.
An obligation under section 44 not to enter into a franchise agreement, unless the agreement provides the franchisee with a reasonable opportunity to make a return during the term of the agreement on any investment required by the franchisor as part of entering into, or under, the agreement.
However, these sections will not apply to a franchise agreement entered into, transferred, renewed or extended before 1 November 2025. The delayed application of sections 43 and 44 is said to be intended to allow time for franchisors proposing to enter franchise agreements that are not new vehicle dealership agreements to adjust to these new requirements. New vehicle dealership agreements will though be subject to similar obligations in sections 45 and 46 from the commencement of the New Code (which are based on clause 46A and 46B of the Old Code respectively).
What are the Implications for Disclosure?
The New Code provides that:
A disclosure document created before 1 November 2025 is not required to include the information in subitems 14(1A) and (1B) of Schedule 1 of the New Code, which deal with new requirements relating to significant capital expenditure; and
The obligation to update a disclosure document annually under section 21 of the New Code will not apply before 1 November 2025 in relation to a disclosure document given to a prospective franchisee before 1 April 2025 under clause 9 of the Old Code. This does not affect the requirement to update a disclosure document on request under section 33 and if a financial year ends before 1 November 2025, the franchisor is obliged to update the disclosure document under the Old Code.
Accordingly:
If a franchise agreement is entered, renewed, extended or transferred prior to 1 April 2025, the Old Code applies to the agreement and disclosure obligations under Old Code apply.
If a franchise agreement is entered into on or after 1 April 2025, the franchise agreement would need to comply with the New Code, provided however that sections 43 (relating to compensation on early termination) and 44 (relating to reasonable opportunity for return on franchisee’s investment) would not have to be complied with in relation to a franchise agreement entered before 1 November 2025.
If a franchise agreement is entered into, renewed, extended or transferred on or after 1 November 2025 though, sections 43 and 44 would apply and would need to be complied with.
If a franchise agreement is entered, renewed, extended or transferred on or after 1 April 2025:
If a disclosure document has been given to a prospective franchisee before 1 April 2025, this existing disclosure document will be taken to be a disclosure document for the purpose of the New Code.
If a disclosure document has not been given to a prospective franchisee before 1 April 2025, a disclosure document compliant with the New Code would need to be given (unless the prospective franchisee is permitted to opt out from receiving the disclosure document and does so). However, the disclosure document is not required to include the information in sub items 14(1A) and (1B) of Schedule 1 of the New Code if the disclosure document is created before 1 November 2025.
The prospective franchisee would also need to be given a copy of the New Code (unless the prospective franchisee is permitted to opt out from receiving the New Code and does so).
If:
the franchisee has, or has recently had, another franchise agreement with the franchisor that is the same or substantially the same as the new franchise agreement; and
the business that is the subject of the new franchise agreement is the same or substantially the same as under the other agreement, the prospective franchisee can opt out by written notice from receiving a copy of a disclosure document and the New Code.
Unless the prospective franchisee opts out from receiving a copy of a disclosure document and the New Code, the obligations in the New Code apply in relation to receiving from a prospective franchisee a written statement that a prospective franchisee has received, read and had a reasonable opportunity to understand the disclosure document and the New Code. Independent advice statements would also need to be received by the franchisor but are not required for renewal or extension of term or scope of a franchise agreement.
No Key Facts Sheet is required to be given to the prospective franchisee.
What are the Implications for Specific Purpose Funds and Marketing Funds?
Requirements relating to specific purpose funds that are not marketing funds or other cooperative funds have also been delayed. In this regard:
For a specific purpose fund that is not a marketing fund or other cooperative fund controlled or administered by or for a franchisor or a master franchisor, the requirements in section 31 of the New Code (requiring a franchisor to provide financial statements in relation to specific purpose funds if a franchise agreement requires the franchisee to pay money into such a fund) and section 61 (dealing with payments to and from a specific purpose fund) will only commence on and from 1 November 2025.
A disclosure document created before 1 November 2025 is not required to include the information in item 15 of Schedule 1 in relation to a specific purpose fund that is not a marketing fund or other cooperative fund controlled or administered by or for a franchisor or a master franchisor (whether the franchisee is a franchisee or subfranchisee of the franchisor or master franchisor). However, this will not affect the requirements to update a disclosure document under section 21 or 33 of the New Code.
Section 100 of the New Code also deems compliance with the Old Code from 1 April 2025 to 31 October 2025 to be compliance with the New Code in relation to a specific purpose fund that is a marketing fund or other cooperative fund controlled or administered by or for the franchisor or a master franchisor (whether the franchisee is a franchisee or subfranchisee of the franchisor or master franchisor), in certain circumstances.
What are Some of the Key Takeaways for Franchisors?
Some of the key takeaways for franchisors in relation to the New Code are:
Franchisors will need to prepare a form of franchise agreement and disclosure document compliant with the New Code.
Franchisors will need to be ready to comply with sections 43 (relating to compensation on early termination) and 44 (relating to reasonable opportunity for return on franchisee’s investment) of the New Code on and from 1 November 2025.
Franchisors will need to prepare for eligible prospective franchisees to be able to opt out from receiving a disclosure document and a copy of the New Code and applicable cooling off periods.
Franchisors will no longer be required to create, maintain, or provide a Key Facts Sheet to prospective franchises on and from 1 April 2025.
Franchisors will need to prepare for compliance with the new obligation to advise franchisees of their right to request a disclosure document. A franchisor has two months (instead of 14 days) to provide a disclosure document when it is requested (which request may be made once every 12 months).
In updating franchise agreements, matters for franchisors to consider would include the following:
The New Code has made changes to the provisions relating to termination of a franchise agreement. In particular:
For certain kinds of serious breaches, the franchisor would not be able to terminate unless it has provided the franchisee seven days’ written notice of the proposed termination and grounds. These include findings by a Court that the franchisee has committed a Fair Work serious contravention of a Fair Work civil remedy provision and/or certain provisions of the Migration Act 1958 (Cth).
For termination in cases where the franchisee voluntarily abandons the franchised business, operates the franchised business in a way that endangers public health or safety, or acts fraudulently in connection with the operation of the franchised business, a franchisor must not terminate the agreement before a notice period of seven days passes without a dispute notice being given. If a dispute notice is given, the agreement cannot be terminated until the end of 28 days after the day the dispute notice is given.
A franchisor would also have certain rights to require a franchisee not to operate the business or part of a business if the franchisor is proposing to take action to terminate for these special termination grounds and specified serious breaches.
A franchisor will now be prohibited from entering a franchise agreement that includes a restraint of trade clause that is inconsistent with the applicable requirements (as well as restricted from relying on a restraint of trade clause in certain circumstances where a franchise agreement is not extended).
The definition of “motor vehicle dealership” in the New Code is expanded to include servicing or repairing of motor vehicles.
In updating disclosure documents, additional disclosure would need to be made regarding:
Proceedings against a responsible franchisor entity or holding company under subsection 558(1) and (2) of the Fair Work Act 2009 (Cth);
“Specific purpose funds” (instead of only marketing funds) from 1 November 2025; and
The rationale, amount, timing, nature, outcomes, benefits, and risks of any significant capital expenditure that may be required of the franchisee from 1 November 2025.
GeTtin’ SALTy Episode 44 | California 2025 SALT Outlook [Podcast]
In the latest episode of the GeTtin’ SALTy podcast, host Nikki Dobay and guest Shail Shah, both shareholders at Greenberg Traurig, discuss the complexities of California’s state and local tax landscape as 2025 begins. The episode kicks off with a surprising announcement from Governor Gavin Newsom: California has shifted from a significant budget deficit to a surplus.
The discussion delves into the implications of this fiscal roller coaster, with Shail offering insights into Governor Newsom’s positioning on taxes. The conversation explores indirect tax increases through adjustments in apportionment factors and deductions.
Nikki and Shail address the changes in California’s apportionment rules from the 2024 budget. They provide updates on legal challenges against these retroactive changes, with organizations like the National Taxpayers Union questioning the constitutionality. This litigation is likely to shape the tax landscape in 2025, with potential outcomes still uncertain.
They also tackle the topic of California’s market-based sourcing regulations, which have been in development since 2017, and the future of FTB (Franchise Tax Board) guidance.
The episode concludes with a surprise non-tax question about the perils of a malfunctioning coffee maker.