Beginning in January, "covered entities" will be prohibited from charging specified fees in connection with a commercial financing transaction with a "small business" or "small business" owner.  Cal. Stat. ch. 881 (SB 666).  Although relatively brief, there are many ins and outs to this new law, including several defined terms such as "commercial financing" and "covered entity".  There are also several significant exemptions to this ban.  Today's post, however, will cover only the new law's clumsy definition of "small business":

 “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has 100 or fewer employees and average annual gross receipts of fifteen million dollars ($15,000,000) or less over the previous three years.

Cal. Civ. Code § 1799.300(j)

This definition is problematical for several reasons.  First, what does it mean to be "independently owned and operated"-   independent from whom or what?  Would a business operating under a franchise agreement, for example, be considered to be "independently operated"?  Second, when is a business "not dominant in its field of operation"?  Does "field of operation" refer to geography, market share , or both?  Does a business qualify as "dominant" if it is the largest business in its field of operation but does not control 50% or more of its field of operation?