California Franchise Investment Bond
Bond Requirements & Set Rates
| Bond Amount Required | Annual Premium |
| Varies | Varies |
Franchisors with insufficient net worth to meet their pre-opening obligations may be required by the Department of Financial Protection and Innovation to get a surety bond as a condition of registration. Required by the California DFPI, the California franchise investment bond guarantees compliance with the California Franchise Investment Law and protects franchisees from financial harm caused by fraud, misrepresentation, or statutory violations.
Cost of a California Franchise Investment Bond
The premium for a California franchise investment bond is a small percentage of the required bond amount. The bond amount must equal theâ¯aggregate total of all initial franchise feesâ¯and other pre-opening payments for franchises not yet open for business in California.
Why You Need a California Franchise Investment Bond
The California surety bond involves three parties:
- Principal: Franchisor required to obtain the bond
- Obligee: California Department of Financial Protection and Innovation
- Surety: Bonding company that guarantees compliance
If a franchisee suffers financial loss due to violations of the Franchise Investment Law, they may file a claim against the bond. The surety investigates the claim and, if valid, compensates the harmed party up to the bond amount. The franchisor is then responsible for reimbursing the surety for any claims paid.
This bond provides financial protection to franchise investors while ensuring franchisors operate transparently and responsibly.
How to Get a California Franchise Investment Bond
NNA Surety makes the bonding process simple and efficient:
- Confirm bond requirements with the DFPI.
- Complete this bond application.
- Receive a customized quote instantly.
- Pay the premium and file the bond with the DFPI.
Apply for Your California Franchise Investment Bond
Stay compliant and protect your franchise brand with a California franchise investment bond tailored to your registration requirements. Complete this application or call 855-215-2160 to get started.