Did you pay for the distributorship? I would assume that you did.
Thus, the transaction sounds like the sale of a franchise which, typically, would entail capital gain (if you realized more than you paid for the distributorship) assuming you did not retain any power, right, continuing interest, etc.
Correct, I do not retain any rights in business. I felt it was a franchise also by definition. Which form would that best fit? I was unsure of Form 4797 because I felt like the franchise didn't meet any of the IRS definitions or criteria. The business distributorship is more of a contract and from what I've looked at, the IRS considers it an ordinary gain. Am I incorrect?