Under California Law, there are three elements for a business relationship to be considered a franchise:
1. Marketing plan or system
2. Trademark
3. Payment of a franchise fee.
Thus, there is no franchise if one of the elements are absent.
#1. Trademark – franchisee uses franchisor’s trademark. | #2. Franchise Fees – franchisee pays fees to franchisor ($500 federal law; $100 California law). | #3. Business System – franchisee uses franchisor’s business or marketing system, or is subject to franchisor’s control. | |
Franchise | X | X | X |
Seller Assisted Marketing Plans and Business Opportunities | X | X | |
Multi-Level Marketing | X | X | |
Sales Agents | x | x | |
Licenses | X | X | |
Distributorships | X | X |