Hawaii Court Says Distribution Agreement Is Not A Franchise

A federal court in Hawaii recently issued an opinion finding that a distribution agreement is not a franchise under Hawaii’s Franchise Investment Law. Where the distributor: (1) is not permitted to “substantially associate” its business with the manufacturer; and/or (2) pays only the bona fide wholesale price for its merchandise (and no other form of compensation) to the manufacturer, the relationship will typically not be considered a franchise under state laws.