S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3589

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 27, 2009
                               ___________

Introduced by M. of A. BRADLEY, TOBACCO -- read once and referred to the
  Committee on Economic Development, Job Creation, Commerce and Industry

AN ACT to amend the general business law, in relation to the definition,
  sale and operation of franchises

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 3 of section 681 of the general  business  law,
as added by chapter 730 of the laws of 1980 and paragraph (b) as amended
by  chapter  87 of the laws of 1981, is amended and a new subdivision 19
is added to read as follows:
  3. "Franchise" means a contract  or  agreement,  either  expressed  or
implied, whether oral or written, between two or more persons by which:
  (a)  A  franchisee  is  granted the right to engage in the business of
offering, selling, or distributing goods or services under  a  marketing
plan  or system prescribed in substantial part by a franchisor, and [the
franchisee is required to pay, directly or indirectly, a franchise  fee,
or]
  (b)  [A  franchisee  is granted the right to engage in the business of
offering, selling, or distributing goods or services] THE  OPERATION  OF
THE  FRANCHISEE'S BUSINESS PURSUANT TO SUCH A PLAN OR SYSTEM IS substan-
tially associated with the franchisor's trademark, service  mark,  trade
name,  logotype, advertising, or other commercial symbol designating the
franchisor or its affiliate, and [the]
  (C) THE franchisee is required to pay, directly or indirectly, a fran-
chise fee.
  A franchise under  this  article  shall  not  include  any  agreement,
contract,  or franchise subject to the provisions of article eleven-B of
this chapter or section one hundred ninety-nine of this chapter, or  any
agreement or contract for the sale of motor fuel.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03540-01-9

A. 3589                             2
              

  19.  "BUSINESS  OPPORTUNITY" MEANS A BUSINESS OPPORTUNITY AS THAT TERM
IS DEFINED BY THE FEDERAL TRADE  COMMISSION  IN  16  CFR  PART  437,  AS
AMENDED FROM TIME TO TIME.
  S 2. The general business law is amended by adding a new section 683-a
to read as follows:
  S  683-A.  BUSINESS  OPPORTUNITY  NOTICE.  1. IT SHALL BE UNLAWFUL AND
PROHIBITED FOR ANY PERSON TO SELL OR OFFER TO SELL IN THIS STATE A BUSI-
NESS OPPORTUNITY UNLESS AND UNTIL SUCH PERSON FILES A  NOTICE  WITH  THE
DEPARTMENT OF LAW AND COMPLIES WITH THE FEDERAL TRADE COMMISSION DISCLO-
SURE  REQUIREMENTS  UNDER  16 CFR PART 437 AS AMENDED FROM TIME TO TIME.
THE FORM OF NOTICE SHALL BE PRESCRIBED BY THE DEPARTMENT OF  LAW.    THE
DEPARTMENT  OF  LAW  SHALL  NOT REQUIRE THE SELLER TO FILE MORE THAN THE
FOLLOWING INFORMATION:
  (A) THE NAME OF THE SELLER.
  (B) THE NAME UNDER WHICH THE SELLER INTENDS TO DO BUSINESS.
  (C) THE SELLER'S PRINCIPAL BUSINESS ADDRESS.
  (D) IF THE SELLER IS NOT DOMICILED IN NEW YORK, A CONSENT  TO  SERVICE
OF PROCESS.
  (E) A REFERENCE TO THIS SECTION.
  2.  THE  SELLER  SHALL  IMMEDIATELY  NOTIFY THE DEPARTMENT OF LAW OF A
CHANGE IN THE INFORMATION CONTAINED IN THE NOTICE.
  S 3. Section 684 of the general business law is amended by adding  two
new subdivisions 7 and 8 to read as follows:
  7. THE OFFER OR SALE OF A FRANCHISE SHALL BE EXEMPT FROM THE REGISTRA-
TION  AND DISCLOSURE REQUIREMENTS UNDER SECTION SIX HUNDRED EIGHTY-THREE
OF THIS ARTICLE IF THE OFFER OR SALE IS MADE TO A PERSON WHO  IS  NOT  A
RESIDENT  IN  THIS STATE, THE FRANCHISE WILL NOT BE OPERATED IN NEW YORK
AND THE OFFEROR FILES A NOTICE WITH THE DEPARTMENT  OF  LAW  BEFORE  THE
SALE  OF  THE  FRANCHISE  OR  WITHIN THIRTY DAYS THEREAFTER. THE FORM OF
NOTICE SHALL BE PRESCRIBED BY THE DEPARTMENT OF LAW. THE  DEPARTMENT  OF
LAW SHALL NOT REQUIRE THE OFFEROR TO FILE MORE THAN THE FOLLOWING INFOR-
MATION:
  (A) THE NAME OF THE OFFEROR.
  (B)  THE  NAME  UNDER  WHICH  THE OFFEROR INTENDS TO DO BUSINESS OR IS
DOING BUSINESS.
  (C) THE OFFERER'S PRINCIPAL BUSINESS ADDRESS.
  (D) A REFERENCE TO THIS SECTION.
  THE OFFEROR SHALL IMMEDIATELY NOTIFY THE DEPARTMENT OF LAW OF A CHANGE
IN THE INFORMATION CONTAINED IN THE NOTICE.
  8. THE OFFER OR SALE OF A FRANCHISE SHALL BE EXEMPT FROM THE REGISTRA-
TION AND DISCLOSURE REQUIREMENTS UNDER SECTION SIX HUNDRED  EIGHTY-THREE
OF THIS ARTICLE IF THE OFFER IS FOR THE GRANT OF MASTER FRANCHISE RIGHTS
TO  A  SINGLE  SUBFRANCHISOR  AND  THE  OFFEROR  FILES A NOTICE WITH THE
DEPARTMENT OF LAW BEFORE THE SALE OF THE FRANCHISE OR WITHIN THIRTY DAYS
THEREAFTER. THE FORM OF NOTICE SHALL BE PRESCRIBED BY THE DEPARTMENT  OF
LAW.  THE  DEPARTMENT  OF LAW SHALL NOT REQUIRE THE OFFEROR TO FILE MORE
THAN THE FOLLOWING INFORMATION:
  (A) THE NAME OF THE OFFEROR.
  (B) THE NAME UNDER WHICH THE OFFEROR INTENDS  TO  DO  BUSINESS  OR  IS
DOING BUSINESS.
  (C) THE OFFERER'S PRINCIPAL BUSINESS ADDRESS.
  (D)  IF THE OFFEROR IS NOT DOMICILED IN NEW YORK, A CONSENT TO SERVICE
OF PROCESS.
  (E) A REFERENCE TO THIS SECTION.
  THE OFFEROR SHALL IMMEDIATELY NOTIFY THE DEPARTMENT OF LAW OF A CHANGE
IN THE INFORMATION CONTAINED IN THE NOTICE.

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  S 4. Subdivision 1 of section 694  of  the  general  business  law  is
amended by adding a new paragraph (d) to read as follows:
  (D)   THE   FEE   FOR  FILING  A  NOTICE  UNDER  SECTION  SIX  HUNDRED
EIGHTY-THREE-A OF THIS ARTICLE, OR UNDER SUBDIVISION SEVEN OR  EIGHT  OF
SECTION  SIX  HUNDRED  EIGHTY-FOUR OF THIS ARTICLE, IS ONE HUNDRED FIFTY
DOLLARS.
  S 5. This act shall take effect immediately.