In Minnesota, anyone who wants to sell or offer to sell a franchise must register their Franchise Disclosure Document (FDD) with the Securities Division of the Department of Commerce. This is because Minnesota is a franchise registration state. The Securities Division is responsible for overseeing the registration of franchises and regulating franchise activity in the state. The aim is to protect the interests of both the franchisees and franchisors, as well as the consumers. It is also important to note that these registrations must be renewed annually to comply with the state’s franchise laws. However, given the complexity of these laws, franchisors often choose to work with experienced legal professionals to avoid costly issues during the registration process.
What Is a Franchise?
Under the Minnesota Franchise Act, a franchise is defined as any relationship, whether by an oral or written agreement, where the franchisee is granted the ability to engage in the business of offering or distributing services or goods using the franchisor’s trademark, trade name, service mark, advertising, logotype, or other commercial symbol or related characteristics. In addition, the franchisee and the franchisor have a common interest in the marketing of the services or goods at wholesale, by lease, retail, agreement, or otherwise, and the franchisee will pay a franchise fee.
Franchise Registration Laws in Minnesota
The Franchise e-File System in Minnesota allows individuals to register their franchises on paper or electronically. The fee for filing the initial registration is $400. While the annual renewal costs can range between $200 and $300, depending on whether the renewal requires amendments to the disclosure documents. If a renewal application is not filed on time, the franchisor may need to pay the original registration fee, as if they were filing a new franchise registration application.
In addition, new franchisors will also need to submit the following documents with the initial franchise registration paperwork:
- A copy of the FDD
- A Uniform Franchise Registration Application
- Franchise seller disclosure forms
- A Consent to Service of Process form
- Consent of Accountant
How To Know if a Franchise Is Subject To Minnesota Regulations
Franchises offered or sold in Minnesota, directed to the state, or accepted in the state will be subject to the Minnesota Franchise Act and its registration provisions. Additionally, franchises located in Minnesota, regardless of where the offer or acceptance occurred, will also be subject to the Act.
How Long Will It Take for The Registration Application To Be Approved?
The FDD registration process in Minnesota usually takes 3 to 4 weeks to complete. Once your registration application is confirmed, the Department will return your original cover letter with a date stamp. However, calling the Department to check your registration status is advisable.
You should also note that the Department does not usually assess the disclosures mentioned in your FDD. Therefore, ensuring that your FDD complies with the Minnesota Franchise Act is crucial.
Contact FortmanSpann Today To Learn More About Franchise Laws in Minnesota
At FortmanSpann, our legal team is one of the few firms in the United States experienced in franchise law. Our legal professionals are dedicated to representing franchisee rights and providing them with the highest-quality legal representation they deserve. Our firm represents franchise clients in various State Courts, arbitrations, mediations, and Federal Courts all over the U.S.
If you would like to learn more about franchise laws in Minnesota or review your specific situation, contact us today and find out how our legal team can assist you.