Part Definitions

1. Law
2. Tennessee Code
3. Commercial Instruments and Transactions
4. Trade Practices
5. Franchise Terminations, Nonrenewals or Modifications
6. Part Definitions

As used in this part, unless the context otherwise requires:

1. “Franchise” means a written or oral agreement for a definite or indefinite period, in which a person grants to another person authority to use a trade name, trademark, service mark or related characteristic within an exclusive territory, or to sell or distribute goods or services, within an exclusive territory, at wholesale, retail, by lease agreement or otherwise; provided, that “franchise” means only such agreement where the franchisee is required to be licensed under § 57-3-203; and provided further, that a franchise is not created by a lease, license or concession granted by a retailer to sell goods or furnish services on or from premises which are occupied by the retailer-grantor primarily for its own merchandising activities;
2. “Franchisee” means a person to whom a franchise is offered or granted only if such person is required to be licensed under § 57-3-203;
3. “Franchisor” means a person who grants a franchise to another person where such person is the holder of a permit issued pursuant to § 57-3-602;
4. “Good cause” means:
   1. Failure by a franchisee to comply substantially with the requirements imposed or sought to be imposed upon the franchisee by the franchisor, which requirements are not discriminatory as compared with the requirements imposed on other similarly situated franchisees, either by their terms or in the manner of their enforcement, and which requirements are not in violation of any law or regulation;
   2. The failure by the franchisee to act in good faith and in a commercially reasonable manner in carrying out the terms of the franchise;
   3. Voluntary abandonment of the franchise;
   4. Conviction of the franchisee in a court of competent jurisdiction of an offense punishable by a term of imprisonment in excess of one (1) year;
   5. Any act by a franchisee which substantially impairs the franchisor's trade name or trademark;
   6. The institution of insolvency or bankruptcy proceedings by or against a franchisee, or any assignment or attempted assignment by a franchisee of the franchise or the assets of the franchise for the benefit of creditors;
   7. Failure of the franchisee to pay to the franchisor within thirty (30) days after receipt of notice any uncontested sums past due the franchisor and relating to the franchise; or
   8. Failure of the franchisee to comply with federal, state or local law or regulations applicable and material to the operation of the franchise which could reasonably impair the franchisee's continued future performance;
5. “Good faith” means honesty in fact in the conduct or transaction concerned;
6. “Person” means a natural person, corporation, partnership, trust or other entity and, in case of an entity, it includes any other entity which has a majority interest in such entity, or effectively controls such other entity, as well as the individual officers, directors and other persons in active control of the activities of each such entity; and
7. “Sale, transfer or assignment” means any disposition of a franchise or any interest therein, with or without consideration, including, but not limited to, bequests, inheritance, gift, exchange, lease or license.

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