Legal Question in Construction Law in California

I have been approached to provide a proposal that include on-site manufacturing and labor by a facilities management company that holds a nationwide contract to service a large preschool chain. They do not hold a California contractors license. Are they allowed to "re-sell" my construction proposal add their profit margin to it and then provide their proposal and enter into a contact on behalf of the end customer?

My understanding is that, in California, they must also have a contractor's license to solicit sub-contractor proposals. Am I wrong?

Asked on 2/02/22, 3:22 pm

1 Answer from Attorneys

Timothy McCormick Schneider, Holtz & Hutchison

That would depend on the exact nature and details of what they would have you do, what that is in the greater scheme of what they provide and what their deal is with their customer. For example, new McDonalds franchises often involve a deal where McDonald's real estate subsidiary acquires the land, and enters into a "build to suit" lease with the franchisee. They then hire a contractor to build the McDonalds, and then the franchisee occupies it under the lease and franchise agreement. McDonald's real estate subsidiary does not need a contractor's license for that. Similarly a property management company as agent for a condo association can hire contractors to build or repair facilities without a contractor's license. The more the construction work becomes a larger component of the deal and if the direct purpose of the deal with the customer is to build things for the customer that require a license, the more you get into the realm of being a general contractor and need a license to hire other contractors. The devil is in the details.

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Answered on 2/03/22, 9:49 am

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