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?