The New York Law Blog: Definition of a Franchise in New York State: New York Franchise Law Basics
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Sunday, June 12, 2016

Definition of a Franchise in New York State: New York Franchise Law Basics

Franchise Lawyers New York
New York Franchise Law
New York has a broad definition of a franchise, thus, leading to a broad range of mere "licensing" and "agent/distributor" relationships as franchises.

Any business organization that is deemed or may be deemed a franchise by the State of New York should, immediately, retain a New York-based franchise attorney with significant experience in the business and legal side of franchising.  A designation of a business relationship as a franchise, immediately, requires obligations of the franchisor.  Our New York franchise lawyers will be writing followup articles on franchise obligations under New York law over the next few weeks.

Definition of a Franchise in New York
Section 608 of the New York code defines a franchise in New York as:
3. "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 the franchisee is required to pay, directly or indirectly, a franchise fee, or 
(b) A franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate, and the franchisee is required to pay, directly or indirectly, a franchise fee. A franchise under this article shall not include any agreement, contract, or franchise subject to the provisions of article eleven-B of this chapter or section one hundred ninety-nine of this chapter, or any agreement or contract for the sale of motor fuel. 
4. A "franchisee" is a person to whom a franchise is granted. 
5. A "franchisor" is a person who grants a franchise. 
6. "Area franchise" means a contract or agreement between a franchisor and a subfranchisor whereby the subfranchisor is granted the right, for consideration given in whole or in part for such right, to sell or negotiate the sale of franchises in the name or on behalf of the franchisor; unless specifically stated otherwise, "franchise" includes "area franchise." 
This broad definition of a franchise classifies any relationship that meets the following three requirements a franchise under New York's Franchise Law.
  1. An agreement between parties that is either oral, implied or in writing;
  2. A franchisee is offered the right to "offer," "sell" or "distribute" goods or services under a marketing plan or system; and 
  3. A franchisee must pay a franchise fee.  
A relationship may, also, be deemed a franchise even if the following definition is not met if:
  1. Franchisee is offered the right to "offer," "sell" or "distribute" goods or services;
  2. A franchisee is offered the right to use the trademark or other designation of the goods or service; and
  3. A fee is paid by the franchisee.
We will be writing additional articles on New York Franchise Law over the next few weeks.  Please check back regularly.

Our law firm is proud to represent numerous international franchisees many of them doing business in New York and throughout the United States.
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*Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is ranked as a leading franchise attorney by Who's Who Legal and other publications.

Sean Hayes is co-chair of the Korea Practice Team and Chair of International Practice Group at IPG Legal.  He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.  Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  He has, also, received the highest rating by AVVO and other legal rating services.