Court Watch

As franchise law approaches its 40th birthday, one might imagine that some of the key questions about franchising and distribution generally would have been ironed out by the courts by now. Not true. And nowhere is this better demonstrated than in the continuing quest to define what is, and is not, a franchise or a distributorship. Part of the problem, of course, is that the definitions of these terms vary among the statutes that regulate franchise sales disclosures and franchise relationships, and the FTC's definition of a franchise only further complicates the question ' although not in the franchise relationship context. The bottom line is that what constitutes a franchise for franchise-sales purposes may not be a franchise for franchise-relationship issues, and what might constitute a franchise in California may or may not be a franchise in another jurisdiction in either a franchise-sales situation or a franchise-relationship situation. Moreover, some states try to regulate only what the business world would consider true franchises, while in other jurisdictions, in particular Wisconsin and Rhode Island, relationship laws cover a wider range of distribution systems, including both distributorships and dealerships. In any event, the complex regulatory scheme makes it no surprise that cases trying to define the parameters of a franchise or a distributorship just keep on coming.