2020 Indiana Code
Title 23. Business and Other Associations
Article 2. Securities and Franchises
Chapter 2.5. Franchises
23-2-2.5-1. Definitions

Universal Citation: IN Code § 23-2-2.5-1 (2020)

Sec. 1. As used in this chapter:

(a) "Franchise" means a contract by which:

(1) a franchisee is granted the right to engage in the business of dispensing goods or services, under a marketing plan or system prescribed in substantial part by a franchisor;

(2) the operation of the franchisee's business pursuant to such a plan is substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate; and

(3) the person granted the right to engage in this business is required to pay a franchise fee.

"Franchise" includes a contract whereby the franchisee is granted the right to sell franchises on behalf of the franchisor. The term as defined in subdivisions (1), (2), and (3) does not include a contract where the franchisee, or any of its officers or directors at the time the contract is signed, has been in the type of business represented by the franchise or a similar business for at least two (2) years, and the parties to the contract anticipated, or should have anticipated, at the time the contract was entered into that the franchisee's gross sales derived from the franchised business during the first year of operations would not exceed twenty percent (20%) of the gross sales of all the franchisee's business operations.

(b) "Franchisee" means a person to whom a franchise is granted.

(c) "Franchisor" means a person who grants a franchise.

(d) "Sale" or "sell" includes every contract or agreement of sale of, contract to sell, or disposition of, a franchise or interest in a franchise for value.

(e) "State" includes a territory or possession of the United States, the District of Columbia, and Puerto Rico.

(f) "Fraud" and "deceit" includes any misrepresentation in any manner of a material fact, any promise or representation or prediction as to the future not made honestly or in good faith, or the failure or omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading.

(g) "Offer" or "offer to sell" does not include the renewal or extension of an existing franchise where there is no interruption in the operation of the franchised business by the franchisee.

(h) "Publish" means to issue or circulate by newspaper, mail, radio, or television, or otherwise disseminate to the public.

(i) "Franchise fee" means any fee that a franchisee is required to pay directly or indirectly for the right to conduct a business to sell, resell, or distribute goods, services, or franchises under a contract agreement, including, but not limited to, any such payment for goods or services. "Franchise fee" does not include:

(1) the payment of a reasonable service charge to the issuer of a credit card by an establishment accepting or honoring the credit card;

(2) amounts paid to a trading stamp company by a person issuing trading stamps in connection with the retail sale of goods or services; or

(3) the purchase or agreement to purchase goods at a bona fide wholesale price.

(j) "Disclosure statement" means the document provided for in section 13 of this chapter and all amendments to such document.

(k) "Write" or "written" includes printed, lithographed, or produced by any other means of graphic communication.

(l) "Advertisement" means any published communication which offers any franchise for sale.

(m) "Affiliate" means any person who, directly or indirectly through one (1) or more intermediaries, controls, is controlled by, or is under common control with, the person to whom affiliation is attributed.

(n) "Commissioner" means the Indiana securities commissioner under IC 23-19-6-1(a).

(o) "Service station franchisee" means a person who is granted by an oil company, refiner, jobber, or other franchisor a supply franchise agreement or a lease franchise agreement, or both, to sell gasoline at retail by a metered pump in Indiana.

(p) "Designated family member" means any person named in a franchise agreement by a service station franchisee as the person entitled to fulfill the terms of the agreement on behalf of the franchisee if the franchisee dies before the term of the franchise has ended. Only the following are eligible to be named as designated family members:

(1) The spouse of the franchisee.

(2) A natural or adopted child of the franchisee.

(3) A stepchild of the franchisee.

(4) The guardian of the franchisee's child or stepchild.

Formerly: Acts 1975, P.L.262, SEC.1. As amended by P.L.241-1983, SEC.1; P.L.206-1993, SEC.1; P.L.27-2007, SEC.10.

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