The Scope of This Book

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INTRODUCTION

THE SCOPE OF THIS BOOK

This book is about U.S. antitrust law and franchising. Franchise

means both (1) a business licensed to operate under its supplier’s

trademark and selling the supplier’s goods at retail and (2) a business

operating under a trademark or service mark license that specifies the

method of operation, including the sources from which it purchases

supplies. The former is generally described as a product distribution1 or

traditional2 franchise, and the latter as a business format franchise.3

Under either form of franchising, the customer sees a retail business

selling goods or services under a single mark. The general use of the

term franchise to include both types of business models, however, is not

intended to suggest that specific businesses that may satisfy the general

definitions here are franchises for purposes of state franchise law or,

conversely, that businesses that do not satisfy these definitions—e.g., a

manufacturer selling through independent dealers operating under their

own trade names—are not franchises for purposes of state law.

The book looks closely at antitrust issues confronting both types of

franchises. The application of antitrust law to business format franchises

in particular has given rise to a specialized body of law within general

antitrust jurisprudence to the extent, for example, franchisors have

required franchisees to purchase from designated sources. Those

developments are described in detail in this volume.

To the extent that supply chain antitrust issues in the franchise

context are the same as those facing any firm using dealers or

1. See, e.g., Krehl v. Baskin-Robbins Ice Cream Co., 664 F.2d 1348, 1353

(9th Cir. 1982) (“[u]nder the distribution type [franchise] system, the

franchised outlets serve merely as conduits through which the trademarked

goods of the franchisor flow to the ultimate consumer”).

2. U.S. DEP’T OF COMMERCE, FRANCHISING IN THE ECONOMY, 1986-88, at 1

(1988). See generally ROGER D. BLAIR & FRANCINE LAFONTAINE,

ECONOMICS OF FRANCHISING 5-6 (2005). Blair and Lafontaine observe

that traditional franchising today “is comprised largely of automobile

dealerships, gasoline service stations, and soft-drink bottlers.” Id. at 6

(footnote omitted).

3. See, e.g., BLAIR & LAFONTAINE, supra note 2, at 6-8; ABA ANTITRUST

SECTION: MONOGRAPH NO. 17, FRANCHISE PROTECTIO N: LAWS AGAINST

TERMINATION AND THE ESTABLISHMENT OF ADDITIONAL FRANCHISES

117-18 (1990).