California Business and Professions Code 20001 – As used in this chapter, “franchise” means a contract or agreement, …
As used in this chapter, “franchise” means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:
(a) A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor; and
Terms Used In California Business and Professions Code 20001
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- franchise: means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:
California Business and Professions Code 20001
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- license: means license, certificate, registration, or other means to engage in a business or profession regulated by this code or referred to in Section 1000 or 3600. See California Business and Professions Code 23.7
- Licensee: means any person authorized by a license, certificate, registration, or other means to engage in a business or profession regulated by this code or referred to in Sections 1000 and 3600. See California Business and Professions Code 23.8
- Plaintiff: The person who files the complaint in a civil lawsuit.
- Rescission: The cancellation of budget authority previously provided by Congress. The Impoundment Control Act of 1974 specifies that the President may propose to Congress that funds be rescinded. If both Houses have not approved a rescission proposal (by passing legislation) within 45 days of continuous session, any funds being withheld must be made available for obligation.
(b) The operation of the franchisee’s business pursuant to that plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate; and
(c) The franchisee is required to pay, directly or indirectly, a franchise fee.
(d) “Franchise” does not include any of the following:
(1) Any franchise governed by the Petroleum Marketing Practices Act (P.L. 95-297).
(2) Lease departments, licenses, or concessions at or with a general merchandise retail establishment where the lease department, licensee, or concessionaire is incidental and ancillary to the general commercial operation of the retail establishment. Sales of a leased department, license, or concessionaire are incidental and ancillary to the general commercial operation of the retail establishment if they amount to less than 10 percent of the establishment’s sales.
(3) A nonprofit organization operated on a cooperative basis by and for independent retailers which wholesales goods and services primarily to its member retailers and in which all of the following is applicable:
(A) Control and ownership of each member is substantially equal.
(B) Membership is limited to those who will use the services furnished by the organization.
(C) Transfer of ownership is prohibited or limited.
(D) Capital investment receives no return.
(E) Substantially equal benefits pass to the members on the basis of patronage of the organization.
(F) Members are not personally liable for obligations of the organization in the absence of a direct undertaking or authorization by them.
(G) Services of the organization are furnished primarily for the use of the members.
(H) Each member and prospective member is provided with an offering circular which complies with the specifications of § 31111 of the Corporations Code.
(I) No part of the receipts, income, or profit of the organization are paid to any profitmaking entity, except for arms-length payments for necessary goods and services and members are not required to purchase goods or services from any designated profitmaking entity.
(J) The nonprofit organization is subject to an action for rescission or damages under § 3343.7 of the Civil Code if the organization fraudulently induced the plaintiff to join the organization.
(Amended by Stats. 1989, Ch. 1380, Sec. 1.)