Commissioner's Opinion No. 73 / 5F

State of California Department of Corporations

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

This letter is not an Interpretive Opinion for the reasons stated below.

Mr. David M. Epstein
Epstein, O'Neill & Utan
Attorney at Law
Suite 800, Scranton Life Building
Scraton, PA 18503

Dear Mr. Epstein:

The request contained in your letter dated December 11, 1972, for reconsideration of the opinions expressed by us in our letter dated December 14, 1971 and commissioner's Opinion No. 72/6F dated March 15, 1972, concerning Lomma Enterprises, Inc. ("Lomma"), has been considered by the Commissioner. We have heretofore advised you in our aforementioned communications that on the basis of the information set forth in your letters dated November 3, 1971 and February 7, 1972, we did not concur in the opinion expressed by you that the agreements between Lomma and purchasers of the so-called Lomma Championship Miniature Golf courses ("Lomma Courses"), are not "franchises" within the definition of Section 31005, and are not subject to the provisions of the California Franchise Investment Law. The additional information submitted with your letter dated December 11, 1972, does not lead us to express a different opinion, and for that reason, and as stated in Commissioner's Opinion No. 72/6F, today's letter is not an interpretive opinion.

Lomma's revised brochure submitted with your letter dated December 11, 1972, eliminates references to national advertising and training programs. Provisions for reservation of locations are also omitted instead the brochure inquires whether applicants have locations in mind without indicating whether Lomma will make such locations available.

In our opinion, it is significant that the revised brochure suggests rates of charge for the use of the Lomma Courses and contains a copy of an article stating that Lomma sponsors a miniature golf tournament. These facts indicate that Lomma is prescribing a marketing plan by way of establishing a multiplicity of golf course establishments, all to he operated with the appearance of centralized management and uniform standards, a feature characteristic of a franchising program (Dept. of corps. Rel. No. 3-F, p. 5).

We also note that the revised brochure indicates that Lomma contemplates meeting with purchasers at its office and factory. If training, promotional activities, or other arrangements pertinent to the operation of Lomma Courses are discussed, recommended, or suggested at such meetings, this would add to the marketing plan or system prescribed by Lomma, as above stated.

As regards the question raised by you as to whether the operation of Lomma courses is substantially associated with Lomma's commercial symbol, you have advised us that a small sign will be placed on the golf courses showing the name of the manufacturer. Also, as above stated, Lomma sponsored golf tournaments will be conducted. As previously stated, under such circumstances, public identification . with Lomma's trade name is likely to result.

Dated: San Francisco, California
February 2, 1973

By order of
BRIAN R. VAN CAMP
Commissioner of Corporations

By __________________
HANS A. MATTES
Assistant Commissioner
Office of Policy