§ 51-19-02 — Definitions

When used in this chapter, unless the context otherwise requires:
1. "Advertisement" means any written or printed communication by means of recorded
telephone messages or spoken on radio, television, or similar communications media
published in connection with an offer or sale of a franchise.
2. "Area franchise" means any contract or agreement between a franchisor and a
subfranchisor by which the subfranchisor is granted the right, for consideration given in
whole or in part for such right, to sell or negotiate the sale of franchises in the name or
on behalf of the franchisor.
3. "Business days" are all days other than every Saturday, every Sunday, and such other
days as are specified or provided for as holidays in this code.
4. "Commissioner" means the insurance commissioner.
5. a. "Franchise" means a contract or agreement, either expressed or implied, whether
oral or written, between two or more persons by which:
(1) A franchisee is granted the right to engage in the business of offering,
selling, or distributing goods or services under a marketing plan or system
prescribed in substantial part by a franchisor;
(2) The operation of the franchisee's business pursuant to such plan or system
is substantially associated with the franchisor's trademark, service mark,
trade name, logotype, advertising, or other commercial symbol designating
the franchisor or its affiliate; and
(3) The franchisee is required to pay, directly or indirectly, a franchise fee.
b. When used in this chapter, unless specifically stated otherwise, "franchise"
includes "area franchise".
6. "Franchise fee" means any fee or charge that a franchisee or subfranchisor is required
to pay or agrees to pay for the right to enter into a business under a franchise
agreement, including, but not limited to, any such payment for such goods and
services. However, the following may not be considered the payment of a franchise
fee:
a. The purchase or agreement to purchase goods at a bona fide wholesale price if
no obligation is imposed upon the purchaser to purchase or pay for a quantity of
such goods in excess of that which a reasonable businessperson normally would
purchase by way of a starting inventory or supply or to maintain a going inventory
or supply.
b. The payment of a reasonable service charge to the issuer of a credit card by an
establishment accepting or honoring such credit card.
c. Amounts paid to a trading stamp company by a person issuing trading stamps in
connection with the retail sale of merchandise or services.
d. Any other consideration which the commissioner by rule excludes from "franchise
fee".
7. "Franchisee" means a person to whom a franchise is granted.
8. "Franchisor" means a person who grants a franchise.
9. "Fraud" and "deceit" are not limited to common-law fraud and deceit.
10. "Order" means a consent, authorization, approval, prohibition, or requirement
applicable to a specific case issued by the commissioner.
11. "Person" means an individual, a corporation, a limited liability company, a partnership,
a joint venture, an association, a joint-stock company, a trust, or an unincorporated
organization.
12. "Publish" means publicly to issue or circulate by newspaper, mail, radio, or television
or otherwise to disseminate to the public.

13. "Rule" means any published regulation or standard of general application issued by
the commissioner.
14. a. (1) "Sale" or "sell" includes every contract or agreement of sale of, contract to
sell, or disposition of a franchise or interest in a franchise for value.
(2) "Offer" or "offer to sell" includes every attempt to offer to dispose of or
solicitation of an offer to buy a franchise or interest in a franchise for value.
The terms defined in this subsection do not include the renewal or extension
of an existing franchise where there is no interruption of the operation of the
franchised business by the franchisee.
(3) "Offer to purchase" includes every attempt to offer to acquire, or solicitation
of an offer to sell, a franchise or interest in a franchise for value.
b. (1) An offer or sale of a franchise is made in this state when an offer to sell is
made in this state or an offer to buy is accepted in this state, or, if the
franchisee is domiciled in this state, the franchised business is or will be
operated in this state.
(2) An offer to sell is made in this state when the offer either originates from this
state or is directed by the offeror to this state and received at the place to
which it is directed. An offer to sell is accepted in this state when acceptance
is communicated to the offeror in this state when the offeree directs it to the
offeror in this state reasonably believing the offeror to be in this state, and it
is received at the place to which it is directed.
(3) An offer to sell is not made in this state merely because the publisher
circulates or there is circulated on the publisher's behalf in this state any
bona fide newspaper or other publication of general, regular, and paid
circulation which has had more than two-thirds of its circulation outside this
state during the past twelve months, or a radio or television program
originating outside this state is received in this state.
15. "State" means any state, territory, or possession of the United States, the District of
Columbia, and Puerto Rico.
16. "Subfranchisor" means a person to whom an area franchise is granted.