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.
Tag: hidden franchise
The Unintended Franchise: If It Quacks Like A Duck . . .
An article I wrote about “hidden franchises,” that is, business arrangements that meet the technical definition of a franchise but do not identify themselves as such, is featured in the January 2013 issue of Nevada Business magazine.
Forward Franchising 