Section 200.106  Bona Fide Wholesale and Retail Price

a)         The Bona Fide Wholesale and Retail Price exceptions to franchise fee described in Section 3(14)(c) and (f) of the Act apply if the price charged constitutes a fair payment for goods purchased at a comparable level of distribution.  No part of the price may be for the right to enter into the franchise business.

b)         Only goods sold to the franchisee for resale qualify for the bona fide wholesale price exception.  The price charged for a trademarked product does not exceed its bona fide wholesale price merely because that price exceeds the wholesale price of non-trademarked products of comparable quality and specifications.  If the trademarked product commands a premium price by virtue of the trademark it carries, such premium does not constitute the payment of a franchise fee.

c)         The bona fide wholesale and retail price exceptions apply only to purchases of goods.  Services, rental payments, and leases of real or personal property are not within the category of "goods" regardless of whether the payment for such items constitutes a fair payment.  Payments for services are presumed to be in part for the right granted to the franchisee to engage in the franchise business.  Training programs are services and not goods regardless of whether offered, distributed or communicated by word of mouth, through instructions or lectures, in writing or printed form or by record or tape recording.  If services are provided, an indirect franchise fee will be presumed regardless of whether the agreement sets forth an itemized fee for such services.

(Source:  Amended at 19 Ill. Reg. 16950, effective January 1, 1996)