2018 Arkansas Code
Title 4 - Business and Commercial Law
Subtitle 6 - Business Practices
Chapter 72 - Franchises
Subchapter 2 - Arkansas Franchise Practices Act
§ 4-72-202. Definitions

Universal Citation: AR Code § 4-72-202 (2018)
  • As used in this subchapter, unless the context otherwise requires:
  • (1)

    • (A) "Franchise" means a written or oral agreement for a definite or indefinite period in which a person grants to another person a license to use a trade name, trademark, service mark, or related characteristic within an exclusive or nonexclusive territory or to sell or distribute goods or services within an exclusive or nonexclusive territory at wholesale or retail, by lease agreement, or otherwise.

    • (B) However, a franchise is not created by a lease, license, or concession granted by a retailer to sell goods or furnish services on or from premises which are occupied by the retailer-grantor primarily for its own merchandising activities and a franchise is not created by door-to-door sales complying with § 4-89-101 et seq.;

  • (2) "Person" means a natural person, corporation, partnership, trust, or other entity, and, in case of an entity, "person" shall include any other entity which has a majority interest in such entity or effectively controls such other entity as well as the individual officers, directors, and other persons in active control of the activities of each entity;

  • (3) "Franchisor" means a person who grants a franchise to another person;

  • (4) "Franchisee" means a person to whom a franchise is offered or granted;

  • (5) "Sale, transfer, or assignment" means any disposition of a franchise or any interest therein, with or without consideration, to include, but not be limited to, a bequest, inheritance, gift, exchange, lease, or license;

  • (6) "Place of business" means a fixed geographical location at which the franchisee displays for sale and sells the franchisor's goods or offers for sale and sells the franchisor's services;

  • (7) "Good cause" means:

    • (A) Failure by a franchisee to comply substantially with the requirements imposed upon him or her by the franchisor, or sought to be imposed by the franchisor, which requirements are not discriminatory as compared with the requirements imposed on other similarly situated franchisees, either by their terms or in the manner of their enforcement; or

    • (B) The failure by the franchisee to act in good faith and in a commercially reasonable manner in carrying out the terms of the franchise; or

    • (C) Voluntary abandonment of the franchise; or

    • (D) Conviction of the franchisee in a court of competent jurisdiction of an offense, punishable by a term of imprisonment in excess of one (1) year, substantially related to the business conducted pursuant to the franchise; or

    • (E) Any act by a franchisee which substantially impairs the franchisor's trademark or trade name; or

    • (F) The institution of insolvency or bankruptcy proceedings by or against a franchisee, or any assignment or attempted assignment by a franchisee of the franchise or the assets of the franchise for the benefit of the creditors; or

    • (G) Loss of the franchisor's or franchisee's right to occupy the premises from which the franchise business is operated; or

    • (H) Failure of the franchisee to pay to the franchisor within ten (10) days after receipt of notice of any sums past due the franchisor and relating to the franchise; and

  • (8) "Good faith" means honesty in fact in the conduct or transaction concerned.

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