AMI 2801 Definition—Franchise

Arkansas Supreme Court Committee On Jury Instructions-Civil

Ark. Model Jury Instr., Civil AMI 2801

Arkansas Model Jury Instructions-Civil

December 2023 Update

Arkansas Supreme Court Committee On Jury Instructions-Civil

Chapter 28. Franchise Practices Act

AMI 2801 Definition—Franchise

When I use the word “franchise” in these instructions, I mean a written or oral agreement for a definite or indefinite period, in which a person grants to another person a license to use a trade name, trademark, service mark, or related characteristic within an exclusive or nonexclusive territory, or to sell or distribute goods or services within an exclusive or nonexclusive territory at wholesale, retail, by lease agreement, or otherwise.

NOTE ON USE

Use this instruction in conjunction with AMI 2800.

COMMENT

This instruction is based on Ark. Code Ann. § 4-72-202(1)(A).

Section 4-72-202(1)(B) provides 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 occupied by the retailer-grantor primarily for its own merchandising activities, and a franchise is not created by door-to-door sales complying with Ark. Code Ann. §§ 4-89-101 et seq. If a case involves an issue of fact regarding these issues, this instruction should be modified accordingly.

The Arkansas Franchise Practices Act is inapplicable to a relationship limited by contract to solicitation and procurement of applications for insurance. Stockton v. Sentry Ins., 337 Ark. 507, 989 S.W.2d 914 (1999). The authority to give final, unqualified approval of an order or sale, rather than just to enter into a temporary binder, is critical to determining that an agent is a franchisee under the Act. Gunn v. Farmers Ins. Exch., 2010 Ark. 434.

The Act is also inapplicable where the agreement between the parties did not contemplate the establishment of a fixed place of business as that term is defined in Ark. Code Ann. § 4-72-202(6). Mary Kay, Inc. v. Isbell, 338 Ark. 556, 999 S.W.2d 669 (1999).

The applicability of the Act is often the subject of a motion to dismiss or motion for summary judgment. See Mary Kay, Inc. v. Isbell, supra.

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