Test a dealer or distribution contract against the franchise definition

Key facts

Human involvement
YellowClose supervision
How AI is used
Mark whether the paper mentions a trademark, control or assistance in the method of operation, and a required payment, with the clause. Do not call the contract a franchise.
What the lawyer must review
16 C.F.R. § 436.1(h) defines a franchise as a continuing commercial relationship in which the offer or contract, or the franchise seller's promise or representation, provides that the franchisee will obtain the right to operate a business or to offer, sell or distribute goods, services or commodities identified or associated with the franchisor's trademark; the franchisor will exert or has authority to exert a significant degree of control over the franchisee's method of operation, or will provide significant assistance in that method; and, as a condition of obtaining or commencing the franchise, the franchisee makes or commits to make a required payment to the franchisor or its affiliate. Section 436.1(s) says a required payment does not include payments for reasonable amounts of inventory at bona fide wholesale prices for resale or lease. All three elements are for you to judge. A contract that is not a franchise is outside Part 436.
Written for / version
United States versionUS

Who does what

Who does what
RoleWhat they do
AssistanceDo not begin AI assistance until the responsible lawyer has defined and confirmed its permitted scope.
LawyerSet the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output.

Checklist

  1. Open each relied-on authority independently. Confirm its existence, current status, proposition and any quotation or pinpoint reference.
  2. Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
  3. Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
  4. Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
  5. Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.

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