Your FTB person is wrong.

Cite them to CA Revenue & Taxation Code Section 23153(f)(1) and 17941(d) if the S corp. is an LLC.

"(f) (1) Notwithstanding subdivision (a), every corporation that incorporates or qualifies to do business in this state on or after January 1, 2000, shall not be subject to the minimum franchise tax for its first taxable year."

If the entity is an LLC, also cite them to section 17941(d):

"(d) For purposes of this section, “limited liability company” means an organization, other than a limited liability company that is exempt from the tax and fees imposed under this chapter pursuant to Section 23701h or Section 23701x, that is formed by one or more persons under the law of this state, any other country, or any other state, as a “limited liability company” and that is not taxable as a corporation for California tax purposes."