What is a Franchise vs. Another form?

Under California Law, there are three elements for a business relationship to be considered a franchise: 
1. M
arketing 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

 

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