When used in this chapter, unless the context otherwise requires:
1. “Affiliate” means a person controlling, controlled by, or under common control with
another person, every officer or director of such a person, and every person occupying a
similar status or performing similar functions.
2. “Business day” means a day other than a Saturday, Sunday, or federal holiday.
3. a. “Franchise” means either of the following:
(1)An oral or written agreement, either express or implied, which provides all of the
following:
(a)Grants the right to distribute goods or provide services under a marketing plan
prescribed or suggested in substantial part by the franchisor.
(b)Requires payment of a franchise fee to a franchisor or its affiliate.
(c)Allows the franchise business to be substantially associa
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When used in this chapter, unless the context otherwise requires:
1. “Affiliate” means a person controlling, controlled by, or under common control with
another person, every officer or director of such a person, and every person occupying a
similar status or performing similar functions.
2. “Business day” means a day other than a Saturday, Sunday, or federal holiday.
3. a. “Franchise” means either of the following:
(1) An oral or written agreement, either express or implied, which provides all of the
following:
(a) Grants the right to distribute goods or provide services under a marketing plan
prescribed or suggested in substantial part by the franchisor.
(b) Requires payment of a franchise fee to a franchisor or its affiliate.
(c) Allows the franchise business to be substantially associated with a trademark, service
mark, trade name, logotype, advertisement, or other commercial symbol of or designating
the franchisor or its affiliate.
(2) A master franchise.
b. “Franchise” does not include any business that is operated under a lease or license on
the premises of the lessor or licensor as long as such business is incidental to the business
conducted by the lessor or licensor on such premises, including, without limitation, leased
departments, licensed departments, and concessions and the leased or licensed department
operates only under the trademark, trade name, service mark, or other commercial symbol
designating the lessor or licensor.
c. “Franchise” also does not include any contract under which a petroleum retailer or
petroleum distributor is authorized or permitted to occupy leased marketing premises, which
premises are to be employed in connection with the sale, consignment, or distribution of
motor fuel under a trademark which is owned or controlled by a refiner which is regulated
by the federal Petroleum Marketing Practices Act, 15 U.S.C. §2801 et seq. The term “refiner”
means any person engaged in the refining of crude oil to produce motor fuel, and includes
any affiliate of such person. “Franchise” also does not include a contract entered into by any
person regulated under chapter 103A, subchapter IV, or chapter 123, 322, 322A, 322C, 322D,
322F, 522B, or 543B, or a contract establishing a franchise relationship with respect to the
sale of construction equipment, lawn or garden equipment, or real estate.
4. “Franchise fee” means a direct or indirect payment to purchase or operate a franchise.
Franchise fee does not include any of the following:
a. Paymentofareasonableservicechargetotheissuerofacreditcardbyanestablishment
accepting the credit card.
b. Payment to a trading stamp company by a person issuing trading stamps in connection
with a retail sale.
c. An agreement to purchase at a bona fide wholesale price a reasonable quantity of
tangible goods for resale.
§523H.1, FRANCHISES 2
d. Thepurchaseoragreementtopurchase,atafairmarketvalue,anyfixtures,equipment,
leasehold improvements, real property, supplies, or other materials reasonably necessary to
enter into or continue a business.
e. Payments by a purchaser pursuant to a bona fide loan from a seller to the purchaser.
f. Paymentofrentwhichreflectspaymentfortheeconomicvalueofleasedrealorpersonal
property.
g. The purchase or agreement to purchase promotional or demonstration supplies,
materials, or equipment furnished at fair market value and not intended for resale.
5. “Franchisee” means a person to whom a franchise is granted. Franchisee includes the
following:
a. A subfranchisor with regard to its relationship with a franchisor.
b. A subfranchisee with regard to its relationship with a subfranchisor.
6. “Franchisor” means a person who grants a franchise or master franchise, or an affiliate
of such a person. Franchisor includes a subfranchisor with regard to its relationship with a
franchisee, unless stated otherwise in this chapter.
7. “Marketing plan” means a plan or system concerning a material aspect of conducting
business. Indicia of a marketing plan include any of the following:
a. Price specification, special pricing systems, or discount plans.
b. Sales or display equipment or merchandising devices.
c. Sales techniques.
d. Promotional or advertising materials or cooperative advertising.
e. Training regarding the promotion, operation, or management of the business.
f. Operational, managerial, technical, or financial guidelines or assistance.
8. “Master franchise” means an agreement by which a person pays a franchisor for the
right to sell or negotiate the sale of franchises.
9. “Offer” or “offer to sell” means every attempt to offer or to dispose of, or solicitation of
an offer to buy, a franchise or interest in a franchise for value.
10. “Person” means a person as defined in section 4.1, subsection 20.
11. “Sale” or “sell” means every contract or agreement of sale of, contract to sell or
disposition of, a franchise or interest in a franchise for value.
12. “Subfranchise” means an agreement by which a person pays a franchisor for the right
to sell or negotiate the sale of franchises.
13. “Subfranchisee” means a person who is granted a franchise from a subfranchisor.
14. “Subfranchisor” means a person who is granted a master franchise.