Cal. Codes » Corporations Code / TITLE 4. SECURITIES / DIVISION 5. FRANCHISE INVESTMENT LAW / PART 1. DEFINITIONS
California Codes

Cal. Corporations Code § 31005 (2026)

Definitions — Franchise Investment Law

✓ current as of May 2026
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(a)“Franchise” means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:

(1)A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor; and

(2)The operation of the franchisee’s business pursuant to such plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor or its affiliate; and

(3)The franchisee is required to pay, directly or indirectly, a franchise fee.

(b)For the purposes of this division, the term “franchise” also means the following:

(1)Any contractual agreement between a petroleum corporation or distributor and a gasoline dealer, or between a petroleum corporation and distributor, under which the petroleum distributor or the gasoline dealer is granted the right to use a trademark, trade name, service mark, or other identifying symbol or name owned by the other party to the agreement, or any agreement between a petroleum corporation or distributor and a gasoline dealer, or between a petroleum corporation and distributor, under which the petroleum distributor or the gasoline dealer is granted the right to occupy premises owned, leased, or controlled by the other party to the agreement, for the purposes of engaging in the retail sale of petroleum and other products of the other party to the agreement.

(2)Any contract between a refiner and a petroleum distributor, between a refiner and a petroleum retailer, between a petroleum distributor and another petroleum distributor, or between a petroleum distributor and a petroleum retailer, under which a refiner or petroleum distributor authorizes or permits a petroleum retailer or petroleum distributor to use, in connection with the sale, consignment, or distribution of gasoline, diesel, gasohol, or aviation fuel, a trademark which is owned or controlled by such refiner or by a refiner which supplies fuel to the petroleum distributor which authorizes or permits such use. The term “franchise” as defined in this paragraph includes the following:

(A)Any contract under which a petroleum retailer or petroleum distributor is authorized or permitted to occupy leased marketing premises, which premises are to be employed in connection with the sale, consignment, or distribution of fuel under a trademark which is owned or controlled by such refiner or by a refiner which supplies fuel to the petroleum distributor which authorizes or permits such occupancy.

(B)Any contract pertaining to the supply of fuel which is to be sold, consigned, or distributed under a trademark owned or controlled by a refiner, or under a contract which has existed continuously since May 15, 1973, and pursuant to which, on May 15, 1973, fuel was sold, consigned, or distributed under a trademark owned and controlled on such date by a refiner.

(C)The unexpired portion of any franchise, as defined by the preceding provisions of this subdivision, which is transferred or assigned as authorized by the provisions of such franchise or by any applicable provision of state law which permits such transfer or assignment without regard to any provision of the franchise.

(c)For purposes of this division, the term “franchise” does not include a nonprofit organization operated on a cooperative basis by and for independent retailers which wholesales goods and services primarily to its member retailers and to which all of the following is applicable:

(1)Control and ownership of each member is substantially equal.

(2)Membership is limited to those who will avail themselves of the services furnished by the organization.

(3)Transfer of ownership is prohibited or limited.

(4)Capital investment receives no return.

(5)Substantially equal benefits pass to the members on the basis of patronage of the organization.

(6)Members are not personally liable for obligations of the organization in the absence of a direct undertaking or authorization by them.

(7)Services of the organization are furnished primarily for the use of the members.

(8)Each member and prospective member is provided with an offering circular which complies with the specifications of Section 31111.

(9)No part of the receipts, income, or profit of the organization is paid to any profitmaking entity, except for arms-length payments for necessary goods and services, and members are not required to purchase goods or services from any designated profitmaking entity.

(d)The nonprofit organization is subject to an action for rescission or damages under Section 3343.7 of the Civil Code if the organization fraudulently induced the plaintiff to join the organization.

Notes of Decisions
Cited in 19 cases (4 in the last 5 years), 1980–2024 · leading case: People v. JTH Tax, Inc., 212 Cal. App. 4th 1219 (Cal. Ct. App. 2013).
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People v. JTH Tax, Inc., 212 Cal. App. 4th 1219 (Cal. Ct. App. 2013). · cites it 2× “Parties to a franchise agreement contract so that the franchisee markets its goods or services “under a marketing plan or system prescribed in substantial part by a franchisor” and, using this plan or system, substantially associates its business to the franchisor’s trademark,…”
Thueson v. U-Haul Int'l, Inc., 50 Cal. Rptr. 3d 669 (Cal. Ct. App. 2006). · cites it 2× “(Corp. Code, § 31005, subd. (a); Bus. & Prof.”
Kaplan v. Coldwell Banker Residential Affiliates, Inc., 59 Cal. App. 4th 741 (Cal. Ct. App. 1997). “(Corp. Code, § 31005, subd. (a)(1).) “[T]he franchisor’s interest in the reputation of its entire [marketing] system allows it to exercise certain controls over the enterprise without running the risk of transforming its independent contractor franchise into an agent.”
Roberts v. C.R. England, Inc., 827 F. Supp. 2d 1078 (N.D. Cal. 2011). “Cal. Corp.Code § 31005. With regard to the first requirement, East Wind Express v.”
Dress for Success Worldwide v. Dress 4 Success, 589 F. Supp. 2d 351 (S.D.N.Y. 2008). “Cal. Corp.Code § 31005 (Deering 2008). New California courts have defined “marketing plan or system,” but those that have found extensive control and material assistance essential.”
Abadjian v. Gulf Oil Corp., 602 F. Supp. 874 (C.D. Cal. 1984). “Cal.Corp.Code § 31005 (West 1977); See also 34 Cal.”
Twin Cities Galleries, LLC v. Media Arts Grp., Inc., 415 F. Supp. 2d 967 (D. Minn. 2006). “See Cal. Corp.Code § 31005(a)(3), 31011(a). Further, the court finds that even if the Panel did ignore such evidence, petitioners have failed to show bad faith on the part of the arbitrators or conduct “so gross as to amount to affirmative misconduct.”
People v. Kline, 110 Cal. App. 3d 587 (Cal. Ct. App. 1980). “Code, § 995 1 ) and for acquittal on that count at trial, because appellant did not sell or offer to sell a “franchise” as defined by Corporations Code section 31005. Corporations Code section 31110 provides that it is unlawful “to offer or sell any franchise in this state…”
Lads Trucking Co. v. Sears, Roebuck & Co., 666 F. Supp. 1418 (C.D. Cal. 1987). “California Corporation Code Section 31005 and California Business and Professions Code Section 20001 provide the following: “Franchise means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which: (a) A franchisee is…”
Thomas C. Thompson Sports, Inc. v. Farmers & Merchants Bank (In Re Turley), 213 B.R. 857 (C.D. Cal. 1997). “” See Cal. Corp.Code § 31005(a) (West Supp.1996).”
Twin Cities Galleries, LLC v. Media Arts Grp., Inc., 476 F.3d 598 (8th Cir. 2007). “01(4)(a)(l)(iii); Cal. Corp.Code § 31005(a)(3). Media Arts argues that Twin Cities has failed to make the threshold showing that it paid a “franchise fee,” so it is immaterial that the MFA provides broader remedies for franchisees than does the California statute.”
Window World of Baton Rouge, LLC v. Window World, Inc.; Window World of St. Louis, Inc. v. Window World, Inc., 2019 NCBC 53 (N.C. Bus. Ct. 2019). “Compare Cal. Corp. Code § 31005 (a), with 16 C.F.”
Show all 19 citing cases →
Cal. Corporations Code § 31005(a): 1 case
Thomas C. Thompson Sports, Inc. v. Farmers & Merchants Bank (In Re Turley), 213 B.R. 857 (C.D. Cal. 1997). “” See Cal. Corp.Code § 31005(a) (West Supp.1996).”
Cal. Corporations Code § 31005(a)(1): 1 case
Absolute USA, Inc. v. Harman Prof'l, Inc. (C.D. Cal. 2023).
Cal. Corporations Code § 31005(a)(3): 2 cases
Twin Cities Galleries, LLC v. Media Arts Grp., Inc., 415 F. Supp. 2d 967 (D. Minn. 2006). “See Cal. Corp.Code § 31005(a)(3), 31011(a). Further, the court finds that even if the Panel did ignore such evidence, petitioners have failed to show bad faith on the part of the arbitrators or conduct “so gross as to amount to affirmative misconduct.”
Twin Cities Galleries, LLC v. Media Arts Grp., Inc., 476 F.3d 598 (8th Cir. 2007). “01(4)(a)(l)(iii); Cal. Corp.Code § 31005(a)(3). Media Arts argues that Twin Cities has failed to make the threshold showing that it paid a “franchise fee,” so it is immaterial that the MFA provides broader remedies for franchisees than does the California statute.”
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