1974 Franchise Opinions

The Business Law Section is compiling the complete Interpretive Opinions concerning franchise issues from the State of California Department of Corporations.

Here is the archive for 1974. The archive for this year is complete.

  • Opinion No. 74 / 1F - January 24, 1974

    Summary: Arrangements with buyers did not involve a prescribed marketing plan or system, and thus were not franchises within under Section 31005, where buyer was responsible for finding its own retail location, making direct sales in whatever manner it chose, and no territory was specified. 

    Key Words: 31005, franchise defined, territory, marketing plan, system

  • Opinion No. 74 / 2F - January 24, 1974

    Summary: Distributorship agreements involved a prescribed marketing plan and were held to be franchises under Section 31005 where distributor received an exclusive territory, training and advertising and used suggested retail prices. A requirement to purchase specified amounts of products, as well as payments for advertising and training were franchise fees under Section 31011. Commissioner determined that the right to enter into a master agreement under distributorship agreements were area franchises under Section 31008.  

    Key Words: 31005, 31008, 31011, franchise defined, franchise fees, exempt, area franchise, purchase, training, master, distributor

  • Opinion No. 74 / 3F - January 25, 1974

    Summary: Distributorship agreements were franchises under Section 31005 where the agreements involved a marketing concept encompassing advertising, a network of dealers and a published price list. Required initial deposits, as well as charges to supply distributors with forms and advertising materials, were franchise fees under Section 31011. The exemption from the definition of franchise fee under Section 31011(a) was not available where distributor was required to purchase minimum amounts to renew their agreements. 

    Key Words: 31005, 31008, 31009, 31011, 31011(a), Rule 011, franchise defined, franchise fee, exempt, area franchise, price list, deposit, distributor, marketing plan, advertising materials, minimum purchase, renew

  • Opinion No. 74 / 4F - March 26, 1974

    Summary: Arrangements for dealers to sell rodent control devices were franchises under Section 31005 where the dealers were required to make an initial payment and the arrangements included exclusive territories, sales assistance and suggested retail prices. The exemption from the definition of franchisee fee under Section 31011(a) is not available if the dealer is required to purchase amounts which exceed a reasonable starting inventory.

    Key Words: 31005, 31011(a), Rule 011, 31153, franchise defined, franchise fee, exempt, rodent, dealer, territory, suggested prices, reasonable inventory

  • Opinion No. 74 / 5F - March 26, 1974

    Summary: Agreements with real estate sales associates involved a prescribed marketing plan or system, and were held to be franchises under Section 31005, where the agreements included the right to regulate sales associates' use of the real estate sales and included training programs. Deposits required to be made by the sales associates were franchise fees under Section 31011 because, even if totally refundable, those payments deprived the sales associates of funds for a period of time.

    Key Words: 31005, 31011, franchise defined, franchise fees, exempt, territory, distributor, prescribed marketing plan, advertising

  • Opinion No. 74 / 6F - March 26, 1974

    Summary: Distributorship arrangements for the sale and lease of cordless telephone units involved a prescribed marketing plan and were held to be franchises under Section 31005 where the arrangements involved exclusive territories, responsibilities for repairs and maintenance, and prior written consent for any advertising.  

    Key Words: 31005, 31011, 31011(a), Rule 011, franchise defined, franchise fee, exempt

  • Opinion No. 74 / 7F - May 3, 1974

    Summary: Arrangements involving food servicing units located inside industrial and manufacturing plants were franchises under Section 31005 where the unit operators purchased existing contract with plant from franchisor, were required to pay an initial downpayment and monthly service charges, the unit operators were required to follow a marketing plan or system imposed by the existing contract, and franchisor's commercial symbol may be contained on food labels.

    Key Words: 31005, franchise defined, marketing plan, fee, contract, prescribed customer, plant, unit

  • Opinion No. 74 / 8F - March 23, 1974

    Summary: Arrangements involving auto repair facilities were franchises under Section 31005 where persons paid a program fee to receive training, received extensive instructional services and trade secrets, and franchisor required that any additional repair facilities be organized and operated by franchisor.

    Key Words: 31005, 31011, franchise defined, franchise fees, training, system

  • Opinion No. 74 / 9F - May 23, 1974

    Summary: An affiliate program involving tennis camps and clinics was a franchise under Section 31005 where the affiliate agreed to use instructors who had learned and could teach a prescribed system, the affiliate agreed to buy student materials, and the affiliate agreed to meet certain standards of quality in any marketing which used the franchisor's name or symbols.

    Key Words: 31005, franchise defined, fee, system, symbol, tradename, affiliate, marketing plan

  • Opinion No. 74 / 10F - July 19, 1974

    Summary: Manufacturer of cosmetic products who sold products to operators under contracts where training sessions in the use and application of the products was provided, operators were licensed the right to use manufacturer's marks, operators could participate in regional advertising at its own expense and products are sold at market prices, Commissioner concluded the relationships were franchises.

    Key Words: Section 31005, Section 31011, Rule 011.1, Release No. 3-F, Release No. 2-F, Section 31115, prescribed marketing plan or system, franchise fee, bona fide wholesale prices, permissive use of trademarks, burden of proving exemption on applicant

  • Opinion No. 74 / 11F - September 16, 1974

    Summary: Sub-contractor was authorized by company to manufacture components and products according to specifications furnished by manufacturer.  Subcontractor was required to purchase all manufacturing equipment and was prohibited from selling any of the components or products to any other person except manufacturer without manufacturer's consent. Commissioner concluded that a franchisee must be granted the right to distribute goods and services to others than the franchisor and that the commercial symbol must be presented to such other customers.  Commissioner concluded that since the components and products were only sold to manufacturer and no commercial symbol was publicly communicated, the relationship was not a franchise.

    Key Words: Section 31105, Release 3-F, right to sell or distribute must be granted to others beyond franchisor, commercial symbol must be presented to public

  • Opinion No. 74 / 12F - November 14, 1974

    Summary: Producer of motion pictures that distributed such pictures through releasing agencies within a defined geographic area who paid a one-time fee based upon the area population and a royalty for each print of each picture was deemed to be a franchise by Commissioner. Producer provided a manual with step-by-step selling instructions for making the most profit, and advertising materials provided by producer contained its name. Contracts between producer and releasing agencies also allowed agencies to use distributors or other licensees.  Commissioner noted that this could be an area franchise or subfranchisor.

    Key Words: Section 31005, Release 3-F, Sections 31008 and 31009