482E-2 Definitions. As used in this chapter and unless a different meaning appears from the context:

"Area franchise" means any contract or agreement between a franchisor or subfranchisor whereby the subfranchisor is granted the right to sell or negotiate the sale of franchises in the name or on behalf of the franchisor.

"Commissioner" means the commissioner of securities of the department of commerce and consumer affairs.

"Community interest" means a continuing financial interest between the franchisor and franchisee in the operation of the franchise business.

"Director" means the director of commerce and consumer affairs.

"Franchise" means an oral or written contract or agreement, either expressed or implied, in which a person grants to another person, a license to use a trade name, service mark, trademark, logotype or related characteristic in which there is a community interest in the business of offering, selling, or distributing goods or services at wholesale or retail, leasing, or otherwise, and in which the franchisee is required to pay, directly or indirectly, a franchise fee.

"Franchise broker or selling agent" means a person who directly or indirectly engages in the sale of franchises.

"Franchisee" means a person to whom a franchise is offered or granted.

"Franchise fee" means any fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business or to continue a business under a franchise agreement, including, but not limited to, the payment either in lump sum or by installments of an initial capital investment fee, any fee or charge based upon the amount of goods or products purchased by the franchisee from the franchisor or subfranchisor, any fee or charges based upon a percentage of gross or net sales whether or not referred to as royalty fees, any payment for goods or services, or any training fees or training school fees or charges; however, the following shall not be considered payment of a franchise fee: (1) the purchase or agreement to purchase goods at a bona fide wholesale price; (2) the purchase or agreement to purchase goods by consignment; if, and only if the proceeds remitted by the franchisee from any such sale reflect only the bona fide wholesale price of such goods; (3) a bona fide loan to the franchisee from the franchisor; (4) the purchase or agreement to purchase goods at a bona fide retail price subject to a bona fide commission or compensation plan that in substance reflects only a bona fide wholesale transaction; (5) the purchase or agreement to purchase supplies or fixtures necessary to enter into the business or to continue the business under the franchise agreement at their fair market value; (6) the purchase or lease or agreement to purchase or lease real property necessary to enter into the business or to continue the business under the franchise agreement at the fair market value.

"Franchisor" means a person who grants a franchise to another person.

"Offer or offer to sell" includes every attempt or offer to dispose of or solicitation of an offer to buy a franchise or an interest in a franchise.

"Person" means a natural person, corporation, partnership, trust, or other entity and in the case of an entity, it includes any other entity which has a majority interest in such an entity or effectively controls such other entity as well as the individual officers, directors, and other persons in act of control of the activities of each such entity.

"Sale or sell" includes every contract of sale, contract to sell, or disposition of a franchise.

"Subfranchisor" means a person to whom an area franchise is granted. [L 1974, c 18, pt of 1; am L 1978, c 242, 1 to 3; am L 1982, c 204, 8; am L 1983, c 124, 17; am L 2004, c 121, 52]



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