As used in this chapter: (1) "Business relationship" means an agreement that governs the relationship of principal and sales representative. (2) "Commission" means: (a) compensation: (i) that accrues to a sales representative; (ii) for payment by a principal; and (iii) at a rate expressed as a percentage of the dollar amount of sales, orders, or profits; or (b) any other method of compensation agreed to between a sales representative and a principal including: (i) fees for services; and (ii) a retainer. (3) (a) "Direct sales company" means a person that: (i) sells, distributes, or supplies for consideration a good or service through participants: (A) at different levels of distribution; or (B) in accordance with a formula for compensating participants in whole or in part based on: (I) the sale of a good or service; and (II) the recruitment of or the performance or action of another participant; and (ii) (A) permits participants to recruit other participants to sell, distribute, or supply for consideration the person's good or service; or (B) provides for commission, cross-commissions, override commissions, bonuses, refunds, dividends, or other consideration that is or may be paid as a result of: (I) the sale of a good or service; or (II) the recruitment of or the performance or action of another participant. (b) As used in this Subsection (3), "participant" means an independent agent, contractor, or distributor. (4) "Principal" means a person who: (a) engages in any of the following activities with regard to a product or service: (i) manufactures; (ii) produces; (iii) imports; (iv) sells; or (v) distributes; (b) establishes a business relationship with a sales representative to solicit orders for a product or a service described in Subsection (4)(a); and (c) agrees to compensate a sales representative, in whole or in part, by commission. (5) (a) Except as provided in Subsection (5)(b), "sales representative" means a person who enters into a business relationship with a principal: (i) to solicit orders for a product or a service described in Subsection (4)(a); and (ii) under which the person is compensated, in whole or in part, by commission. (b) "Sales representative" does not include: (i) an employee of a principal; (ii) a person licensed under Title 31A, Insurance Code; (iii) a person licensed under Title 41, Chapter 3, Part 2, Licensing; (iv) a person licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act; (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; (vi) a person who places an order or purchases a product or service for that person's own account for resale; or (vii) an independent agent, contractor, or distributor through whom a direct sales company supplies for consideration a good or service. (6) "Terminates" or "termination" means the end of a business relationship between a sales representative and a principal, whether by: (a) agreement; (b) expiration of a time period; or (c) exercise of a right of termination by either the principal or the sales representative.
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