What Is a Franchisee Fee Under New York Franchise Law?
In New York, "franchise fees" are broadly defined and are intended to apply to business relationships and transactions that qualify as franchises. New York defines a franchise fee as a fee that:
"...includes but is not limited to, payments that are made before, upon, or after execution of an agreement to purchase, process, resell, or otherwise distribute a manufacturer's, a distributor's, or a licensor's goods, services, equipment, inventory, or real estate."
The word "payment," includes those made in the form of a lump sum, installments, periodic royalties, profits, cash flow, or those reflected in the price of goods, services, equipment, inventory, or real estate sold or leased by the manufacturer or licensor to the distributor or licensee respectively.
Knowing what qualifies as a franchise fee is important because the existence of a franchise fee is a factor in determining whether or not a franchise relationship exists under New York law. Another factor that determines whether or not a franchise relationship exists is whether or not the relationship involves the implementation of a "marketing plan."
Learn more about New York’s franchise and registration laws.
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