As used in this chapter:

1. (1) "Business relationship" means an agreement that governs the relationship of principal and sales representative.

2. (2) "Commission" means:

   1. (a) compensation:

      1. (i) that accrues to a sales representative;
      2. (ii) for payment by a principal; and
      3. (iii) at a rate expressed as a percentage of the dollar amount of sales, orders, or profits; or

   2. (b) any other method of compensation agreed to between a sales representative and a principal including:

      1. (i) fees for services; and
      2. (ii) a retainer.

3. (3)

   1. (a) "Direct sales company" means a person that:

      1. (i) sells, distributes, or supplies for consideration a good or service through participants:

         1. (A) at different levels of distribution; or

         2. (B) in accordance with a formula for compensating participants in whole or in part based on:

            1. (I) the sale of a good or service; and
            2. (II) the recruitment of or the performance or action of another participant; and

      2. (ii)

         1. (A) permits participants to recruit other participants to sell, distribute, or supply for consideration the person's good or service; or

         2. (B) provides for commission, cross-commissions, override commissions, bonuses, refunds, dividends, or other consideration that is or may be paid as a result of:

            1. (I) the sale of a good or service; or
            2. (II) the recruitment of or the performance or action of another participant.
   2. (b) As used in this Subsection (3), "participant" means an independent agent, contractor, or distributor.

4. (4) "Principal" means a person who:

   1. (a) engages in any of the following activities with regard to a product or service:

      1. (i) manufactures;
      2. (ii) produces;
      3. (iii) imports;
      4. (iv) sells; or
      5. (v) distributes;
   2. (b) establishes a business relationship with a sales representative to solicit orders for a product or a service described in Subsection (4)(a); and
   3. (c) agrees to compensate a sales representative, in whole or in part, by commission.

5. (5)

   1. (a) Except as provided in Subsection (5)(b), "sales representative" means a person who enters into a business relationship with a principal:

      1. (i) to solicit orders for a product or a service described in Subsection (4)(a); and
      2. (ii) under which the person is compensated, in whole or in part, by commission.

   2. (b) "Sales representative" does not include:

      1. (i) an employee of a principal;
      2. (ii) a person licensed under Title 31A, Insurance Code;
      3. (iii) a person licensed under Title 41, Chapter 3, Part 2, Licensing;
      4. (iv) a person licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act;
      5. (v) a person who provides a product or service under a business relationship with a principal that is incident to the purchase or sale of real property;
      6. (vi) a person who places an order or purchases a product or service for that person's own account for resale; or
      7. (vii) an independent agent, contractor, or distributor through whom a direct sales company supplies for consideration a good or service.

6. (6) "Terminates" or "termination" means the end of a business relationship between a sales representative and a principal, whether by:

   1. (a) agreement;
   2. (b) expiration of a time period; or
   3. (c) exercise of a right of termination by either the principal or the sales representative.

Amended by Chapter 438, 2019 General Session