Commissioner's Opinion No. 73 / 38F

State of California Department of Corporations

Brian R. Van Camp, Commissioner
In reply refer to: File No. _____

This interpretive opinion is issued by the Commissioner of Corporations pursuant to section 31510 of the franchise investment law. It is applicable only to the transaction identified in the request therefor, and may not be relied upon in connection with any other transaction.

Mr. David M. Epstein
Attorney at Law
Epstein, O'Neill & Utan
Scranton Life Building
Scranton, PA 18503

Dear Mr. Epstein:

The request contained in your letter dated July 3, 1973, for reconsideration of the opinions expressed in our Policy Letter dated December 14, 1971, and Commissioner's Opinions Nos. 72/6F and 73/5F, dated March 15, 1972, and February 2, 1973, respectively, concerning Lomma Enterprises, Inc. ( "Lomma" ), has been considered by the Commissioner. We have heretofore advised you in the aforementioned communications, and we adhere to the opinion, that the facts set forth in your letters dated November 3, 1971, February 7, 1972, and December 11, 1972, would indicate that the agreements between Lomma and Purchasers of the so-called Lomma Championship Miniature Golf Courses ("Lomma Courses") , are "franchises" within the definition of Section 31005, and subject to the provisions of the California Franchise Investment Law.

Lomma's revised brochure submitted with your letter dated July 3, 1973, and which you have represented, will be used in all transactions with residents of California, does not refer to national advertising or training programs, sponsorship of tournaments, or reservation of locations, and it eliminates suggested charges for the use of Lomma Courses. Nevertheless, this revised brochure states that "it is our belief that you will benefit by arranging a meeting with us at our office and factory...to further acquaint you with all matters relevant to the possibility of your appointment as an operator."

As indicated in Commissioner's opinion No. 73/5F, the discussion of such meeting of training, promotional activities, or other arrangements pertinent to the operation of Lomma Courses, and recommendations or suggestions made at such meetings, may have the effect of, and tend toward the conclusion that Lomma is prescribing a marketing plan or system indicative of a franchise (Dept. of Corps. Release No. 3-P, p.5).

Your recent letter, and the material submitted therewith, does not indicate that a sign will be placed on the golf course's showing the name of the manufacturer. If there is no identification whatever of the operation of the courses with Lomma's trade name, the agreements in our opinion would not be "franchises" within the definition of Section 31005, and would not be subject to the provisions of the Franchise Investment Law.

Dated: San Francisco, California
October 25, 1973

By order of
BRIAN R. VAN CAMP
Commissioner of Corporations

By __________________
HANS A. MATTES
Assistant Commissioner
Office of Policy