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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
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Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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I have a small business that currently gives tabletops to restaurants/bars

Resolved Question:

I have a small business that currently gives tabletops to restaurants/bars with paid for advertising on them. I sell this concept through independent sales reps. I want to change this sales structure to non-franchise dealerships for the US. Do I have to register this business opportunity is the 26 states with business opportunity laws? How difficult a process is this? (I need details). Should I initially concentrate on the other states that do not have this requirement? Also, I need a step by step plan on how to structure this type of dealership along with applicable forms, documents and contracts. Where can I find such information (free, if possible)?

When I look at the information available on the Internet it appears that I have to meet 3 primary rules tests (all three) to be a franchise. These are:

(1) a grant of rights to use another’s trademark to offer, sell, or distribute goods or services (the “grant” or “trademark” element)

(2) significant assistance to, or control over, the grantee’s business, which may take the form of a prescribed marketing plan or what some jurisdictions more broadly describe as a “community of interest” (the “marketing plan variation” element

(3) payment of a required fee (the “franchise fee” element).

If I avoid these three tests, am I able to proceed with developing a non-franchise dealership?

Thank you,
John
Submitted: 2 years ago.
Category: Business Law
Expert:  Fran-mod replied 2 years ago.
Hi, I’m a moderator for this topic and I wonder whether you’re still waiting for an answer. If you are, please let me know and I will do my best to find an Expert to assist you right away. If not, feel free to let me know and I will cancel this question for you. Thank you!
Customer: replied 2 years ago.
I am still waiting for an answer....
Expert:  Fran-mod replied 2 years ago.
Sometimes, finding the right Expert can take a little longer than expected and we thank you greatly for your understanding. We’ll be in touch again shortly.
Expert:  Law Educator, Esq. replied 2 years ago.
Yes, if you avoid the franchise elements, you can sell distributorships or your business opportunity in any state. However, as you correctly noted, you would have to register the opportunity in any of the 26 states that currently have business opportunity registration laws and you would need a local attorney there to help you draft your prospectus to avoid the franchise elements to file in those states. However, this means searching each state for forms and this could be a costly venture (it certainly is beyond the scope of this service).

What you may want to consider is selling distributorships in each place you want to open business and using a distributorship agreement instead. This is where parties sign contracts with you to distribute your product and not just you selling the business opportunity. Here is a SAMPLE DISTRIBUTOR AGREEMENT.



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Customer: replied 2 years ago.
I am a little confused. Isn't setting up and using a distributorship or dealership agreement considered a business opportunity thus, requiring the 26 state registration and/or disclosure?
Expert:  Law Educator, Esq. replied 2 years ago.
This is the common definition of a business opportunity:

Business opportunity" means the sale or lease of any product, equipment, supply, or service which is sold or leased to enable the purchaser to start a business; and
(a) The seller represents that the seller will provide locations or assist the purchaser in finding locations, on premises neither owned nor leased by the purchaser or seller, for the use or operation of vending machines, display racks, cases, or similar devices or coin-operated amusement machines or similar devices; or

(b) The seller represents that the seller will purchase any product made, produced, fabricated, assembled, modified, grown, or bred by the purchaser using, in whole or part, any product, equipment, supply, or service sold or leased to the purchaser by the seller or

(c) The seller guarantees that the purchaser will earn an income greater than or equal to the price paid for the business opportunity; or

(d) The seller represents that if the purchaser pays a fee exceeding three hundred dollars directly or indirectly for the purpose of the seller providing a sales or marketing program, the seller will provide such a program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid for the business opportunity.

Thus, if you just hire companies in each state to sell your product, not just sell them a program, you would avoid such registration.
Customer: replied 2 years ago.
I understand. However, if I do want to set up business opportunity "dealerships", what is the least expensive way to do so? Are there any boilerplate information, forms, contracts that I can use? If yes, where can I find them? Or can you direct me to websites and other helpful information resources.

Thank You!
Expert:  Law Educator, Esq. replied 2 years ago.
If you do want to set up a business opportunity, each state you want to sell in that requires registration has their own forms and you would have to actually go to the state's secretary of state or department of revenue websites and register using their forms. There is no one boilerplate template for doing so.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 88819
Experience: All corporate law, including non-profits and charitable fraternal organizations.
Law Educator, Esq. and 4 other Business Law Specialists are ready to help you

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