Definition and Form of Franchise Fees
Definition and form of franchise fees- The term "franchise fee" refers to the following considerations that a franchisee pays to a franchiser, irrespective of the name or means of payment (Main body of Subparagraph 6 of Article 2 of the 「Fair Transactions in Franchise Business Act」).
· Consideration that a franchisee pays to a franchiser in order to obtain a franchise license, including a license for the use of business marks, or to receive support, training, etc. for his/her business activities, such as membership fees, admission fees, franchise fees, training fees, or down payments
· Consideration that a franchisee pays to a franchiser as a security for the payment of obligations or damages incurred in connection with the purchase price for commodities, etc. supplied by the franchiser
· Consideration that a franchisee pays to a franchiser as the price for fixtures, facilities, or commodities supplied or a rent for real estate provided by the franchiser at the time a franchise license is granted in order to start a franchise business
· Consideration that a franchisee pays to a franchiser, on a regular or irregular basis, for the use of business marks licensed under an agreement with the franchiser, support for and training on business activities, etc. (Article 3(2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
√ Consideration that a franchisee pays to a franchiser, on a regular or irregular basis, at a fixed amount or at a certain rate of sales, operating earnings, etc. under the pretext of a royalty for the trademark; lease fee; share of advertising costs; training fee; rents for signs, indemnity for a business territory; etc.
√ Consideration exceeding the reasonable wholesale price for any consideration that a franchisee pays to a franchiser, on a regular or irregular basis, with respect to prices for goods, main ingredients, minor ingredients, fixtures, equipment, and raw materials or rent of real property
※ However, the foregoing shall not apply to considerations for rights under the 「Patent Act」 acquired by the franchiser to his/her goods, etc. (Article 3(2) of the 「Enforcement Decree of the Fair Transactions in Franchise Business Act」)
· Any other consideration that a prospective franchisee or a franchisee pays to a franchiser to acquire or maintain a franchise license