13.1-559 - Definitions; applicability of chapter. - Virginia Statutes

§ 13.1-559. Definitions; applicability of chapter.

A. As used in this chapter, unless the context otherwise requires:

"Commission" means the State Corporation Commission.

"Controlling person" means a natural person who is an officer, director, orpartner, or who occupies a similar status or performs a similar function, ofa franchisor organized as a corporation, partnership, or other entity, or anyperson who possesses, directly or indirectly, the power to direct or causethe direction of the management and policies of a franchisor, whether throughthe ownership of voting securities, by contract, or otherwise.

"Franchise" means a written contract or agreement between two or morepersons, by which:

1. A franchisee is granted the right to engage in the business of offering,selling or distributing goods or services at retail under a marketing plan orsystem prescribed in substantial part by a franchisor;

2. The operation of the franchisee's business pursuant to such plan or systemis substantially associated with the franchisor's trademark, service mark,trade name, logotype, advertising or other commercial symbol designating thefranchisor or its affiliate; and

3. The franchisee is required to pay, directly or indirectly, a franchise feeof $500 or more.

"Franchise fee" means a fee or charge for the right to enter into ormaintain a business under a franchise, including a payment or deposit forgoods, services, rights, or training, but not including: (i) the payment of abona fide wholesale price for starting and continuing inventory of goods forresale or (ii) the payment at fair market value for the purchase or lease ofreal property, fixtures, equipment, or supplies necessary to enter into ormaintain the business.

"Franchisee" means a person to whom a franchise is granted or sold.

"Franchisor" means a person, including a subfranchisor, who grants orsells, or offers to grant or sell, a franchise.

"Offer" or "offer to sell" includes every attempt to offer to dispose ofor grant, and every solicitation of an offer to buy, a franchise or aninterest in a franchise for value.

"Place of business" means a building or portion thereof from which thegoods or services authorized by the franchise are sold or offered for sale inperson by the franchisee or employees or agents of the franchisee, or a truckor van used in the sale of such goods which is of a type designated by thefranchisor and is equipped and marked in conformance with requirements of thefranchisor.

"Preopening obligations" means the franchisor's obligations to provide tothe franchisee, prior to the opening of the franchisee's business, realestate, improvements, equipment, inventory, training, or other items to beincluded in the offering.

"Sale" or "sell" includes every contract or agreement of sale or grantof, contract to sell, or disposition of a franchise or interest in afranchise for value.

"Subfranchisor" means a person who is authorized by a franchisor to grant afranchise within a particular geographic region.

B. This chapter shall apply only to a franchise the performance of whichcontemplates or requires the franchisee to establish or maintain a place ofbusiness within the Commonwealth of Virginia.

A franchise does not include a contract or agreement by which a retailer ofgoods or services is granted the right either (i) to utilize a marketing planor system to promote the sale or distribution of goods or services which areincidental and ancillary to the principal business of the retailer (salesunder such a plan or system accounting for less than 20 percent of theretailer's gross sales being deemed incidental and ancillary); or (ii) tosell goods or services within, or appurtenant to, a retail businessestablishment as a department or division thereof provided such retailer isnot required to purchase such goods or services from the operator of suchestablishment.

(1972, c. 561; 1978, c. 670; 1990, c. 420; 1991, c. 475; 2007, c. 668; 2009,c. 148.)