CODE OF VIRGINIA

DEFINITIONS; APPLICABILITY OF CHAPTER (§ 13.1-559)

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, or partner, or who occupies a similar status or performs a
similar function, of a franchisor organized as a corporation, partnership, or
other entity, or any person who possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of a franchisor,
whether through the ownership of voting securities, by contract, or
otherwise.”Franchise” means a written contract or agreement between
two or more persons, 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 or
   system prescribed in substantial part by a franchisor;

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

   3.  The franchisee is required to pay, directly or indirectly, a franchise fee
   of $ 500 or more.”Franchise fee” means a fee or charge for the
   right to enter into or maintain a business under a franchise, including a
   payment or deposit for goods, services, rights, or training, but not
   including: (i) the payment of a bona fide wholesale price for starting and
   continuing inventory of goods for resale or (ii) the payment at fair market
   value for the purchase or lease of real property, fixtures, equipment, or
   supplies necessary to enter into or maintain the
   business.”Franchisee” means a person to whom a franchise is
   granted or sold.”Franchisor” means a person, including a
   subfranchisor, who grants or sells, or offers to grant or sell, a
   franchise.”Offer” or “offer to sell” includes every
   attempt to offer to dispose of or grant, and every solicitation of an offer to
   buy, a franchise or an interest in a franchise for value.”Place of
   business” means a building or portion thereof from which the goods or
   services authorized by the franchise are sold or offered for sale in person by
   the franchisee or employees or agents of the franchisee, or a truck or van
   used in the sale of such goods which is of a type designated by the franchisor
   and is equipped and marked in conformance with requirements of the
   franchisor.”Preopening obligations” means the franchisor’s
   obligations to provide to the franchisee, prior to the opening of the
   franchisee’s business, real estate, improvements, equipment, inventory,
   training, or other items to be included in the offering.”Sale” or
   “sell” includes every contract or agreement of sale or grant of,
   contract to sell, or disposition of a franchise or interest in a franchise for
   value.”Subfranchisor” means a person who is authorized by a
   franchisor to grant a franchise within a particular geographic region.

B. This chapter shall apply only to a franchise the performance of which
contemplates or requires the franchisee to establish or maintain a place of
business within the Commonwealth of Virginia.A franchise does not include a
contract or agreement by which a retailer of goods or services is granted the
right either (i) to utilize a marketing plan or system to promote the sale or
distribution of goods or services which are incidental and ancillary to the
principal business of the retailer (sales under such a plan or system accounting
for less than 20 percent of the retailer’s gross sales being deemed
incidental and ancillary); or (ii) to sell goods or services within, or
appurtenant to, a retail business establishment as a department or division
thereof provided such retailer is not required to purchase such goods or
services from the operator of such establishment.

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