Business Law

Opinion No. 72 / 1F

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State of California Department of Corporations

Brian R. Van Camp, Commissioner 
In reply refer to: File No. _____

This interpretive opinion is issued by the Commissioner of Corporations pursuant to section 31510 of the franchise investment law. It is applicable only to the transaction identified in the request therefor, and may not be relied upon in connection with any other transaction.

Mr. James R. Coombs
Attorney at Law
Coobs, Manley & Root
800 Tenth Street
Sacramento, CA 95814

Dear Mr. Coombs:

The request for reconsideration of Interpretive Opinion No. 71/49F in the light of the additional representations contained in your letter dated December 14, 1971, has had the attention of the Commissioner. Your letter raises the question whether, under all of the circumstances described by you, the agreements between Goals Unlimited, Inc., a Texas corporation sometimes dba Goals, Inc. (“Goals”), and persons referred to therein and hereinbelow as “distributors”, are franchises within the definition of Section 31005 and subject to the provisions of the Franchise Investment Law.

You have represented that Goals will not conduct training courses and that provision for transportation to attend such courses and for meals and lodging of distributors at such courses, has been deleted from the agreement. Goals, however, will require potential distributors to present themselves in Amarillo, Texas, at their own expense for evaluation. The agreement, moreover, has been amended to provide that it may be cancelled by either party.

You have further represented that distributors are not required to follow Goals’ retail price suggestions and that in California Goals will not provide sales aids to distributors.

Interpretive opinions are issued pursuant to Section 31510 and 31511 of the Franchise Investment Law’ for the purpose of interpreting legal questions arising under this Law or the regulations promulgated thereunder and not to determine questions of fact. (See Dept. of Corps. Rel. No. 2-F.) Therefore, we can only repeat that if, as a matter of fact, sales are not made pursuant to a plan or system prescribed in substantial part by Goals, the agreements between Goals and the distributors are not “franchises” within the definition of Section 31005, and are not subject to the provisions of the Franchise Investment Law, and that otherwise, for the reasons expressed in Interpretive Opinion No. 71/49F, the agreements are “franchises” and subject to the provisions of the Law.

Dated: San Francisco, California
January 10, 1972

By order of 
Commissioner of Corporations

By __________________ 
Assistant Commissioner
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