2006 New York Code - Definitions.

    § 681. Definitions. 1. "Advertisement" includes any written or printed
  communication,  or  any  communication  by  means  of recorded telephone
  messages or spoken  on  radio,  television,  or  similar  communications
  media, published in connection with an offer or sale of a franchise.
    2. "Department" means the department of law.
    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,
    (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".
    7. "Franchise fee" means any  fee  or  charge  that  a  franchisee  or
  subfranchisor is required to pay or agrees to pay directly or indirectly
  for  the  right  to enter into a business under a franchise agreement or
  otherwise sell, resell or  distribute  goods,  services,  or  franchises
  under such an agreement, including, but not limited to, any such payment
  for  goods or services. The following are not the payment of a franchise
    (a) The purchase or  agreement  to  purchase  goods  at  a  bona  fide
  wholesale price;
    (b)  The  payment  of  a  reasonable service charge to the issuer of a
  credit card by an establishment accepting or honoring such credit card;
    (c) Amounts paid to a  trading  stamp  company  by  a  person  issuing
  trading  stamps  in  connection  with  the retail sale of merchandise or
    (d) The purchase or lease, at fair market value, of real  property  or
  agreement  to so purchase or lease real property necessary to enter into
  the business or to continue the business under the franchise agreement;
    (e) The payment of a fee which on an annual basis does not exceed five
  hundred  dollars  where  the  payor  receives  sales  materials  of   an
  equivalent or greater value than his payment;
    (f)  The  purchase  of  sales  demonstration  equipment  and materials
  furnished at cost for use in making sales and not for resale;
    (g) A lease, license or other agreement by a retailer  permitting  the
  lessee,  licensee  or  beneficiary to offer, sell or distribute goods or
  services on or about the premises occupied by said retailer.
    8. "Franchise sales agent" means a person who directly  or  indirectly
  engages  in  the  offer  or  sale of any franchise on behalf of another.
  Franchisors,  subfranchisors,  and  their  employees  are  not   to   be
  considered franchise sales agents.
    9.  "Franchise  salesman"  means  each  and every person employed by a
  franchisor or franchise sales agent for the purpose of representing such
  franchisor or franchise  sales  agent  in  the  offer  or  sale  of  any
    10.  "Fraud,"  "fraudulent  practice," and "deceit" are not limited to
  common law fraud or deceit, and include:
    (a)  Any  deception,  concealment,  suppression,  device,  scheme   or
  artifice  employed by a franchisor, franchise sales agent, subfranchisor
  or franchise salesman to obtain any money, promissory  note,  commitment
  or  property  by  any  false  or  visionary  pretense, representation or
    (b) Any material misrepresentation in any registered prospectus  filed
  under this article; or
    (c)  The  omission  of  any material fact in any registered prospectus
  filed under this article.
    11. "Offer" or "offer to  sell"  includes  any  attempt  to  offer  to
  dispose  of, or solicitation of an offer to buy, a franchise or interest
  in a franchise for value. The terms "offer" and "offer to sell"  do  not
  include the renewal or extension of an existing franchise where there is
  no  interruption  in  the  operation  of  the franchised business by the
    12.  (a) An offer or sale of a franchise is made in this state when an
  offer to sell is made in this state, or an offer to buy is  accepted  in
  this  state,  or,  if  the  franchisee  is  domiciled in this state, the
  franchised business is or will be operated in this state.
    (b) An offer to sell is made in  this  state  when  the  offer  either
  originated  from  this state or is directed by the offeror to this state
  and received at the place to which it is directed. An offer to  sell  is
  accepted  in  this  state when acceptance is communicated to the offeror
  from this state.
    (c) An offer to sell is not  made  in  this  state  merely  because  a
  publisher  circulates or there is circulated on his behalf in this state
  a bona fide newspaper or other publication of general, regular and  paid
  circulation  which  has  had  more  than  two-thirds  of its circulation
  outside this state  during  the  past  twelve  months,  or  a  radio  or
  television  program  originating  outside this state is received in this
    13. "Person" means  an  individual,  corporation,  partnership,  joint
  venture,  association,  company,  trust,  unincorporated organization or
  other entity and shall include any other person that has  a  substantial
  interest  in  or  effectively  controls  such  person,  as  well  as the
  individual officers, directors,  general  partners,  trustees  or  other
  individuals in control of the activities of each such person.
    14. "Publish" means publicly to issue or circulate by newspaper, mail,
  radio or television, or otherwise to disseminate to the public.
    15.  "Sale"  or  "sell"  includes every contract or agreement of sale,
  contract to sell, or disposition  of,  a  franchise  or  interest  in  a
  franchise for value.
    16.  "State"  means  any state, territory, or possession of the United
  States, the District of Columbia and Puerto Rico.
    17. "Subfranchisor" means a franchisee who has the right  to  sell  or
  subdivide his franchise to another or others, known as "subfranchisees,"
  while  having  and retaining all or part of the franchisor's interest or
  rights under franchise agreements with such  subfranchisee.  Under  this
  article and in this situation, the subfranchisee shall be considered the
  franchisee,  and  both  the  principal  franchisor and the subfranchisor
  shall be considered the franchisor.
    18.  In  any  proceeding  under this article, the burden of proving an
  exemption or an exception from a definition is upon the person  claiming

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