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Franchise Law Applies To Internet

By Jonathan Bick

Traditional franchising is an established business technique that brings together the owner of a branded product with another. A franchisor provides a trademark or trade name and a business arrangement; a franchisee pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. The contract binding the two parties is the franchise.

After the downturn in the Internet advertising market, Internet merchants developed the pay-for-performance e-commerce sector. Internet merchants paid a commission to affiliates who directed people to their Web sites. More sophisticated affiliate programs were set up as revenue sharing arrangements. The terms and conditions for these programs began to mimic franchise agreements.

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