2023 New York Laws › GBS - General Business › Article 33 - Franchises › 681 - 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,
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".
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
fee:
(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
services;
(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
franchise.
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
promise;
(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
franchisee.
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
state.
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
it.