I. Overview of Statutory Background
A. Understand How Your Relationship is Defined
1. Numerous state statutes regulate the relationship between suppliers, manufacturers, and/or franchisors and their dealers/distributors, sales representatives, and/or franchisees.
a. It’s truly a patchwork of laws across 50+ states and territories. There can be a hierarchy of statutes in individual states that provide varying levels of protection depending on the categorization of the channel partner.
i. Generally speaking, franchisees are afforded the strongest and broadest protection, followed by equipment dealers/distributors in particular, qualifying industries, and then sales representatives typically with the least amount of protection.
b. Understanding how your relationship fits within these statutory hierarchies requires a command of the definitional issues that underlie these statutes.
i. Although you should use care when labeling a business partner any of these terms, do not assume your labeling or categorization means something specific in a given situation and in a given state.