Product Distribution Alternatives to Franchises

• License Arrangements - Generally the licensor does not provide a marketing plan, have control over the licensee's business or provide substantial assistance. The licensee pays a fee for the right to use the trademark in connection with its business.
• Distributorship - The distributor pays no fee to the supplier for the right to distribute products, and the supplier does not exercise control over the distributor's business after products are purchased for resale to consumers.
• Business Opportunity - Rights to sell goods and services under the seller's trademarks are not part of the business opportunity sale, nor is the business significantly connected with the seller's trademarks.
• Multi-level Marketing - Participants in a multi-level marketing business pay a small participation fee, not generally enough to qualify as a franchise under federal law or the franchise laws in most states, and they receive compensation based upon their sales volume.
• Sales Agency - Sales agents may receive training and assistance and do sell products under the companies trademarks; however, sales agents do not pay fees for the right to distribute the company's products or services and receive compensation in the form of a sales commission.
• Leased Department - In a leased department arrangement, an independent retailer rents space within a store to sell his or her own products and services, but not the store's trademarked products or services.
• General Partnership - No partner has advantage over any of the other partners in a general partnership. While one partner may contribute capital, another may contribute services and another contributes a trademark, the partnership remains general, unlike a franchise where the franchisor maintains a control advantage over the franchisee.
• Single License - When a company exclusively licenses only one separate company to use its trademark on a nationwide basis, it may offer assistance and charge a fee without being categorized as a franchise. This is an exemption that exists under the FTC Franchise Rule and some state franchise investment laws.
• Limited Offers - In certain states under specified circumstances, limited offers of a franchise are not required to be registered as such, however, they must follow state disclosure laws.

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