Could an unlicensed company franchise a Louisiana veterinarian's practice?

Plain-English summary

Louisiana's veterinary board asked whether a company owned by people without veterinary licenses could franchise with a Louisiana veterinarian to provide veterinary services. In Opinion 03-0107, the Attorney General said such an agreement might not comply with the Veterinary Practice Law. He concluded that sharing in practice revenue made the company an owner of the practice and said its approved-vendor requirement appeared to give it some control over the practice.

The AG did not give a final compliance ruling on the actual contract. He said he had not reviewed it in detail and that the veterinary board had to examine each proposed agreement to decide whether it adversely affected veterinary practice. The opinion distinguished the arrangement from a veterinarian's simple lease of space from an unlicensed company.

Currency note

This opinion was issued in 2003. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

What the opinion meant at issuance

Licensed veterinarians and franchisors

The AG considered a contract's royalty and vendor-control terms relevant to whether an unlicensed company was effectively involved in the practice. He did not decide this particular contract's legality; the board had to make that determination after reviewing the agreement.

Veterinary board

The opinion assigned the board the task of considering each franchise arrangement against the practice law's public-protection purpose. It said a franchise was not automatically outside that law merely because the statute did not use the word "franchise."

Common questions

Q: Did the AG approve the proposed veterinary franchise? A: No. He said the arrangement might conflict with the law and expressly left the compliance determination to the veterinary board.

Q: Why did royalty payments matter?
A: The described royalty was a percentage of the veterinarian's gross monthly revenue. The AG said that because the company shared in practice revenue, it was an owner of the practice.

Q: Did a required vendor list matter?
A: Yes. The AG said forcing the veterinarian to buy drugs and supplies from company-approved sources showed some nonlicensee control that might affect practice.

Background and statutory framework

The letter described the Veterinary Practice Law's purpose as protecting the public from unqualified or dishonest practitioners, cited licensing requirements for persons or groups practicing veterinary medicine, and discussed the professional-entity restriction on unlicensed owners. The AG concluded that revenue sharing made the company an owner of the practice and that the approved-vendor requirement appeared to give it some control. He left the agreement's overall compliance to the board. The source's date stamp is OCR-damaged, so no exact issue date is assigned.

Citations and references

Authorities in the opinion: La. R. S. 12:1015; La. R. S. 37:1511. The letter's footnotes also cite the licensing provisions in La. R. S. 37:1513 and La. R.S. 37:1514.

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/03-0107

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

One American Place
301 Main Street, Suite 600
DEPARTMENT OF JUSTICE
P.O. Box 94005
CIVIL DIVISION
TEL.: (225) 342-7013
BATON ROUGE
FAX: (225) 342-2090

RICHARO P. IEYOUB
70804-9005
ATTORNEY GENERAL

AU8 0 6 2003
Opinion Number 03-0107

169 Veterinarians
La. R. S. 37:1511, etseq
Mr. Michael A. Tomino, Jr., Attorney
La. R. S. 12:1015
Louisiana Board of Veterinary Medicine
Franchise agreement between licensed
101 Wilbourn Blvd., Suite 605
veterinarian and non-licensed corporation may not
Lafayette, LA 70506
comply with Louisiana Veterinary Practice Law.

Dear Mr. Tomino:

The Board of Veterinary Medicine questions if an out of state entity comprised of individuals who are not licensed by the Board as veterinarians may enter into a franchise agreement with a Louisiana licensed veterinarian to provide veterinary medical services in Louisiana. In short, it is our opinion that such an agreement may not comply with the Louisiana Veterinary Practice Law.

The Veterinary Practice Law was enacted to promote the public health, safety, and welfare by safeguarding Louisiana residents against incompetent, dishonest, or unprincipled practitioners of veterinary medicine.1 As such, any person, and person includes any firm, partnership, association, joint venture, cooperative and corporation, or any other group or combination acting in concert, may not practice veterinary medicine in Louisiana unless he is licensed by the Board of Veterinary Medicine.2

Although a franchise agreement is not specifically included as a person, a franchise agreement is a group or combination of persons acting in concert. Thus, it is our opinion that a franchise agreement is not, per se, excluded from the Louisiana Veterinary Practice Law. Additionally, the laws pertaining to professional veterinary medicine corporations provide that no person shall be admitted as a partner or owner in the formation of partnerships, corporations, or limited liability companies for the practice of veterinary medicine who is not a member of the veterinary profession and duly licensed to practice veterinary medicine in Louisiana. A practitioner of veterinary medicine must be amenable to professional discipline.3 In this situation, the franchise agreement is between an individual and a corporation for the purpose of practicing veterinary medicine.

Although we did not read the actual franchise agreement in detail, we do note the agreement provides that royalties are to be paid to the non-licensed corporation based

1La. R. S. 37:1511
2 La. R. S. 37:1513 and La. R.S. 37:1514 3 La. R. S. 12:1015

Page 2

Opinion Number 03-0107
Mr. Michael A. Tomino, Jr., Attorney
Louisiana Board of Veterinary Medicine
Page -2-

upon a percentage of the gross monthly revenue of the licensed veterinarian. Further, the agreement mandates that the licensed veterinarian purchase inventory, supplies, products, drugs and medications only from suppliers and manufacturers who are included in the corporation’s approved vendor list.
Because the non-licensed corporation will share in the revenues of the practice, it is an owner of the practice. The licensed veterinarian must purchase his supplies, including medications, from the corporation’s approved vender list. At a minimum, this requirement may have some impact on the practice of veterinary medicine. There appears to be some degree of control by the non-licensed party. It is not a matter of a veterinarian simply leasing space from a non-licensed corporation.

The Board questions if it is necessary to determine the actual content of each proposed franchise agreement and our response is yes.
The Board must consider each agreement to determine if the agreement will adversely affect the practice of veterinary medicine because it is the Board’s duty to do so. We cannot determine if this agreement complies with the intent of the Veterinary Practice Law. That is a function of the Board. It must decide if this agreement promotes the public health, safety, and welfare by safeguarding the people of the state of Louisiana against incompetent, dishonest, or unprincipled practitioners of veterinary medicine.

We trust this adequately responds to your request. If you have any questions or comments, please contact our office.

Yours very truly,

RICHARD P. IEYOUB
Attorney General

BY:
GRANT
Assistant Attorney General

RPI/TVG/dam