§ 51-19-06 — Application for registration

North Dakota § 51-19-06

• Jurisdiction: North Dakota
• Title 51: Sales and Exchanges
• Ch. 51-19: Franchise Investment Law

Text

The application for registration of an offer must be filed with the commissioner and must
contain the following:

1. The name of the franchisor, the name under which the franchisor is doing or intends to
do business, and the name of any parent or affiliated company that will engage in
business transactions with franchisees.
2. The franchisor's principal business address and the name and address of its agent in
this state authorized to receive service of process.
3. The business form of the franchisor, whether corporate, partnership, limited liability
company, or otherwise.
4. Such information concerning the identity and business experience of persons affiliated
with the franchisor as the commissioner may by rule prescribe.
5. a. A statement whether any person identified in the application for registration:
(1) Has been convicted of a felony or pleaded nolo contendere to a felony
charge or held liable in a civil action by final judgment if such felony or civil
action involved fraud, embezzlement, fraudulent conversion, restraint of
trade, unfair or deceptive practices, or misappropriation of property;
(2) Has pending against the person any indictment or information or complaint
relating to a felony or is the subject of a civil action involving fraud,
embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive
practices, or misappropriation of property;
(3) Is subject to any currently effective order of the securities and exchange
commission or the securities administrator of any state denying registration
to or revoking or suspending the registration of such person as a securities
broker or dealer or investment adviser, or is subject to any currently effective
order of any national securities association or national securities exchange,
as defined in the Securities and Exchange Act of 1934, suspending or
expelling such person from membership in such association or exchange;
(4) Is subject to any currently effective order or ruling of the federal trade
commission; or
(5) Is subject to any currently effective injunctive or restrictive order relating to
business activity as a result of an action brought by any public agency or
department, including, without limitation, actions affecting a license as a real
estate broker or salesman.
b. Such statement must set forth the court, the nature of the matter, the date of
conviction or judgment or current status of any pending action or proceeding, and
any penalty imposed or damages assessed.
6. The business experience of the franchisor, including the length of time the franchisor
has conducted business of the type to be operated by the franchisees, has granted
franchises for such business, and has granted franchises in other lines of business.
7. A recent financial statement of the franchisor, together with a statement of any material
changes in the financial condition of the franchisor from the date thereof. The
commissioner may by rule or order prescribe the form and content of financial
statements required under this chapter, the circumstances under which consolidated
financial statements must be filed, and the circumstances under which financial
statements must be audited by independent certified public accountants or public
accountants.
8. A copy of the typical franchise contract or agreement proposed for use or in use in this
state, including all amendments thereto.
9. A statement of the franchise fee charged, the proposed application of the proceeds of
such fee by the franchisor, and the formula by which the amount of the fee is
determined if the fee is not the same in all cases; a statement indicating whether and
under what conditions all or part of the initial franchise fee may be returned; and a
statement of the estimated total investment to be made for:
a. The initial franchise fee and other fees, whether payable in one sum or in
installments;
b. Fixed assets other than real property and leases for real property, whether or not
financed by contract or installment purchase, leasing, or otherwise;
c. Working capital, deposits, and prepaid expenses;

d. Real property, whether or not financed by contract or installment purchase or
otherwise, and leases for real property; and
e. All other goods and services which the franchisee will be required to purchase or
lease.
10. A statement describing any payments or fees other than franchise fees that the
franchisee or subfranchisor is required to pay to the franchisor, including royalties and
payments or fees which the franchisor collects in whole or in part on behalf of a third
party or parties.
11. A statement of the conditions under which the franchise agreement may be terminated
or renewal refused or repurchased at the option of the franchisor, of any limitations on
the right of the franchisee to sell, transfer, assign, move, renew, or terminate the
franchise, and of any provisions regarding franchisee equity upon sale, termination,
refusal to renew, or repurchase.
12. A statement as to whether, by the terms of the franchise agreement or other device or
practice, the franchisee is limited in the goods or services offered by the franchisee to
the franchisee's customers.
13. A statement of any conditions imposed by the franchisor, whether by the terms of the
franchise agreement or by other device or practice, whereby the franchisee is required
to purchase services, supplies, products, fixtures, or other goods relating to the
establishment or operation of the franchise business from the franchisor or the
franchisor's designee, together with a statement of whether and of the means by which
the franchisor derives income from such purchases.
14. A statement of the terms and conditions of any financing arrangements when offered
directly or indirectly by the franchisor or the franchisor's agent or affiliate.
15. A statement of any past or present practice or of any intent of the franchisor to sell,
assign, or discount to a third party any note, contract, or other obligation of the
franchisee or subfranchisor in whole or in part.
16. A copy of any statement of estimated or projected franchisee earnings prepared for
presentation to prospective franchisees or subfranchisors or other persons, together
with a statement setting forth the data upon which such estimation or projection is
based and explaining clearly the manner and extent to which such data relates to the
actual operations of businesses conducted by the franchisor or its franchisees.
17. A statement describing the training program, supervision, and assistance the
franchisor has provided and will provide the franchisee.
18. A statement of any compensation or other benefit given or promised to a public figure
arising in whole or in part from the use of the public figure in the name or symbol of the
franchise or the endorsement or recommendation of the franchise by the public figure
in advertisements, and the extent to which such public figure is involved in the actual
management of the franchisor.
19. A statement of the number of franchises presently operating and proposed to be sold.
20. A statement of business failures of franchisees, resales to the franchisor, sales of the
franchise to others, and transfers in this state during the two-year period preceding the
date of the statement.
21. A list of the names, addresses, and telephone numbers of all operating franchise
businesses under franchise agreement with the franchisor located in this state.
22. A statement explaining the terms and effects of any covenant not to compete which is
or will be included in the franchise or other agreement to be executed by the
franchisee.
23. A statement as to whether franchisees or subfranchisors receive an exclusive area or
territory, and, if so, a map thereof.
24. Any other information the commissioner may require.
25. Any other information the franchisor may desire to present.
26. When the person filing the application for registration is a subfranchisor, the
application must also include the same information concerning the subfranchisor as is
required from the franchisor pursuant to this section.