Is this an ASG?

Existing company is a Corp owned 51% by the Grandfather and 49% by the Grandson.  They sell cleaning products to the Restaurant Industry.  The Grandson would like to start a new Company, as an LLC.  The Grandson would be 100% Owner of the new entity.  

• New LLC owns IP and charges a royalty to Corp (Existing Company)
• Corp produces and sells products covered by the IP
• Grandson is employed by Corp (Existing Company) as an officer and is possibly a director 

Would this be considered an ASG or can the Grandson start a 401k PS for his new Entity without regard to the Corp (Existing Company)?

I'm not sure I fully understand but from what you describe it does not look like there is any First Service Organization in this group nor does what you describe seem to fall into the Management Group catch all either.

I find the linked IRS document helpful.  But if there are any questions whether or no an  ASG does or does not exists I'll refer them to an ERISA attorney to give them an opinion.

https://www.irs.gov/pub/irs-tege/epchd704.pdf