Current through Register Vol. 46, No. 12, March 20, 2024
(a) A
sale to an existing franchisee form shall be filed with the Department of Law
along with the appropriate fee as fixed by subdivision (c) of this section
pursuant to, General Business Law, section 684.3(d).
(b) Any offer or sale of a franchise, if the
franchise involves the adding of a new product or service line to the existing
business of a prospective franchisee, is exempt from registration provided all
of the following are met:
(1) For at least
the last 24 months prior to the date of sale of the franchise, the prospective
franchisee, or if the prospective franchisee is not a natural person, an
existing officer, director, or managing agent of the prospective franchisee who
has held that position with the prospective franchisee for at least the last 24
months, has been engaged in a business offering products or services
substantially similar or related to those to be offered by the franchised
business.
(2) The new product or
service is substantially similar or related to the product or service being
offered by the prospective franchisee's existing business.
(3) The franchised business is to be operated
from the same business location as the prospective franchisee's existing
business.
(4) The parties
anticipated, in good faith, at the time the agreement establishing the
franchise relationship was reached, that sales resulting from the franchised
business will not represent more than 20 percent of the total sales in dollar
volume of the franchisee on an annual basis.
(5) The prospective franchisee is not
controlled by the franchisor.
(6)
The franchisor notifies in writing the Department of Law of the specific
circumstances surrounding the fractional franchise exemption and pays the
statutory fee for an amendment as prescribed in section 694.1(b) of the General
Business Law.
(c) The
Department of Law shall charge and collect a fee equivalent to that of filing
an amendment under General Business Law, section 694.1(b) for any exemption
granted pursuant to General Business Law, section 684.1 and 684.2.
