Duhaime's Law Dictionary


Franchisee Definition:

The person who receives, for consideration, the license to right to sell a product or service and to operate a business along the lines developed by the franchisor and using the franchisor's trade name or other designation.

Related Terms: Independent Contractor, Licensee

The person who receives, for consideration, the rights to use a trade-mark or some other intellectual property from the holder of such property, the franchisor, pursuant to a franchise agreement.

The franchisee is often compared to an independent contractor. Note these two distinctions: first, from Lobdell v Sugar:

"The status of a franchisee is unique and more akin to that of a limited independent contractor, marked neither by one party's absolute control over the other nor by a sharing of proceeds."

This is different from an independent contractor who exercises independent judgment and performs on the contract using his or her own methods and with no hands-on control by the other party to the contract.

Although a franchisee is frequently compared to a licensee because it also involves a contract with the franchisor, a franchisee must perform according to the regulations, methods and guidelines of the franchisor.

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