Md. Code Regs. 02.02.08.03

Current through Register Vol. 51, No. 12, June 14, 2024

Section 02.02.08.03 - Franchise Fee

A. Scope. The Commissioner shall consider the factors set forth in this regulation in any determination as to whether a franchisee is required to pay a franchise fee, as defined in the Maryland Franchise Law, Business Regulation Article, § 14-201(g), Annotated Code of Maryland.

B. Form and Timing of Payment. A franchise fee includes, but is not limited to, a payment that is made before, upon, or after execution of an agreement to purchase, process, resell, or otherwise distribute a manufacturer's or franchisor's goods, services, equipment, inventory, or real estate, and that is made in the form of a lump sum, installments, periodic royalties, profits, or cash flow, or is or may be reflected in the price of goods, services, equipment, inventory, or real estate sold by the franchisor to the franchisee.

C. Purchases at Wholesale Price. For purposes of the Maryland Franchise Law, Business Regulation Article, § 14-201(g)(3)(i), Annotated Code of Maryland, whether a transaction involves "the purchase of or agreement to purchase goods at a wholesale price" depends upon consideration of a number of factors, including but not limited to whether in connection with an agreement to process, resell, or otherwise distribute a manufacturer's or franchisor's product or service:

(1) Consideration paid by the buyer in purchase transactions is solely for the payment of goods, services, equipment, inventory, or real estate, and does not reflect the buyer's payment for the right to continue the purchase transactions or the business;

(2) The buyer's purchase of goods, services, equipment, inventory, or real estate is required by or in connection with the agreement; and

(3) The cost to the seller of goods, services, equipment, inventory, or real estate is reasonably related to the price paid by the buyer.

Md. Code Regs. 02.02.08.03

Regulations .03 adopted as an emergency provision effective December 2, 1977 (4:26 Md. R. 2005); emergency status extended at 5:8 Md. R. 587
Regulations .03 adopted effective May 5, 1978 (5:9 Md. R. 683) (Recodified from COMAR 02.02.04 to 02.02.10)
Regulations .03 recodified and amended effective May 19, 1986 (13:10 Md. R. 1154)
Regulations ______ .03 under COMAR 02.02.10 repealed effective January 17, 1994 (21:1 Md. R. 27)
Regulations .03 adopted effective January 17, 1994 (21:1 Md. R. 27)