Franchise Registration States and State Franchise Laws – part II

If you are already preparing to launch your franchise, you are probably well aware of all Federal and state laws governing franchise business activities. Some states are known as easy states as the regulations maintaining franchise activities are minimal. Other states however have many and complicated laws and much consideration should be taken if you are setting up your franchise in such state.

Compliance with all Federal and state franchise regulations is paramount. If you fail to comply you may end up paying thousands of fees and even be banned from dealing with franchising! This is why it is much recommended to use the services of experiences franchise attorney. They will review all your documents as well as all your advertising materials.

Franchise state laws and regulations overview.

• Indiana. If you are opening a franchise in the state of Indiana, you must register it in the Division Office of Secretary of State. You need to file your disclosure documents prior to offering and selling. This is why you need to be registered in the state even if you only plan to make a few franchise offers. There are also some franchise law restriction related to termination and transfer of franchise units.
• Maryland. The registration of franchises is done at the Office Division of Securities. You are not allowed to sell or even offer franchises until you complete your registration and have your documents approved. There are franchise laws specifics regarding the way you will advertise your franchise. Similar to some other states, your ads cannot in any way show or discuss profits, earnings, revenues or imply that your franchise is free of risks. In addition you need to submit every advertising material to the Office Division of Securities 5 days prior to its release. There are also some exemptions of registration – for example franchisors that require more than %750,000 initial investments are exempt of registration. Internet offers are also exempt of registration.
• Michigan. Michigan is one of the “easy” states for franchisors. It is a notice only state and this is why the so called registration is much simple that the process in other states. You must register your franchise at the Department of Attorney’s General. The registration is called a “Notice of Intent”. There is a registration fee of $250 that must be paid along submitting the registration documents. According to the state’s franchise regulations, you do not have to submit your franchise disclosure documents.
• Minnesota. Franchises are registered at the Minnesota Department of Commerce and the registration fee is $400. Your franchise registration application must be notarized and you need to enclose costs and sources of fund documents, Uniform Consent to Service of Process (also notarized), your disclosure documents, Franchise Impoundment Agreement and Franchisor Surety Bond. The last two documents are required as condition of registration. You will need to submit all of your advertising materials. There are special laws regarding motor vehicle fuel and hardware franchise businesses as well to those that require $200,000 or more capital investment from their franchisees.