Martin v. T.V. Tempo

Is an agreement granting an exclusive territory to operate a franchise in an "investment contract" for federal securities law purposes?

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The Court of Appeals upheld the district court ruling that the agreement in question was not an "investment contract". Plaintiffs paid T.V. Tempo for the right to publish a television programming guide in an exclusive territory. T.V. Tempo would provide training to the Plaintiffs and their employees, but the distribution, solicitation of advertising, collection of payments, and other operations of the enterprise were solely within the Plaintiff’s control. In addition, a percentage of the sales were remitted to T.V. Tempo. The Appeals Court held that because the agreement was structured to give Plaintiffs such substantial control over the course of the business, the profits were not to be derived "solely from the efforts of others," and the agreement was not an investment contract subject to the securities laws.

Full case and case summary are also available at: http://www.mlmlegal.com/legal-cases/Martin_v_TVTempo628F2d887_1980.php

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Published In: Civil Procedure Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates, Securities Updates

Reference Info:Federal, 11th Circuit, Georgia | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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