Current through Register Vol. 49, No. 13, September 23, 2024
In connection with an offer, grant, or sale of a franchise
in this state, any person authorizing, aiding in, or causing such offer, grant,
or sale of franchises shall be deemed to be engaging in a "false, fraudulent,
or deceptive practice" within the meaning of Minnesota Statutes 1973
Supplement, sections
80C.12
and
80C.13,
without limiting the authority of the commissioner under Minnesota Statutes
1973 Supplement, section
80C.12,
if such person:
A. applies,
authorizes, or causes to be applied any material part of the proceeds from the
grant or sale of such franchises in any way contrary to the purpose specified
in advertising or oral representations utilized in connection with the offer,
grant, or sale of such franchise or in the public offering statement required
to be utilized in connection with the offer, grant, or sale of the
franchises;
B. makes or causes to
be made any statement or representation:
(1)
that is contrary to any disclosure made in the public offering statement;
or
(2) with regard to:
(a) industrywide total income representations
or a portion thereof applicable to the prospective franchisee, whether actual
or projected, for the product or service marketed by the franchisor without
written disclosure of the relationship of such representations to the actual
income experiences of the franchisor's existing franchised
businesses;
(b) projections of
operations or of income or gross or net profits capable of being obtained from
operation of the franchise by the franchisee without written disclosure of the
number of the franchisor's existing franchised businesses that have, to the
franchisor's knowledge, actually attained that projected level;
(c) the income experiences or net worth of
the franchisor or its franchisees without written disclosure whether certified
audited financial statements are available and, if so, from what
source;
(d) the date by which a
prospective franchisee's business will be totally operational without written
disclosure of the basis on which the date has been determined;
(e) recovery of a portion or all of a
franchisee's fee or other investment from the franchisor without written
disclosure whether such fee or investment is secured or guaranteed, and, if so,
in what manner; or
(f) the nature
and number of the locations appropriate for the franchisee's enterprise,
whether or not to be obtained by the franchisor, without disclosing in writing
by whom such sites are to be secured, the manner by which their procurement is
to be financed, the relationship between such site procurement and the
execution of a franchise agreement, and with whom the franchisor has a binding
obligation for the procurement of such locations;
C. fails to make the following
representations:
(1) when a relationship
exists between the franchisor and any affiliate that has offered, is offering,
or will offer a franchise program substantially similar to that being offered,
granted, or sold, to state in writing the nature of such relationship and to
disclose the similarity, if any, of the tradename, trademark, service mark,
logotype, advertising, commercial symbol, or production or marketing plan of
the affiliate to that of the franchise being offered, granted, or
sold;
(2) to state in writing the
qualifications and experience that the prospective franchisee should possess in
order to successfully operate the business that is the subject of the franchise
offered or the additional personnel that will be required for the operation of
the business if such qualifications and experience are not possessed by the
prospective franchisee; or
(3) any
representation required to be made in the public offering statement;
or
D. misrepresents:
(1) the number of similar franchises of the
franchisor that are conducting business or have conducted business within a
given area at any time;
(2) that
the franchise agreement and all of its obligations is or are embodied in one or
several documents presented to, made available to, or executed by the
prospective franchise when, in fact, the execution of additional documents or
the giving by the franchisee of additional consideration is required to obtain
the franchise or that execution of some of the documents is not related to or
necessary for the acquisition of the franchise;
(3) any element of a franchise agreement or
the business of a franchisor or any material disclosures required to be made in
the public offering statement; or
(4) the date upon which the franchisee signed
the franchise agreement or the receipt of the public offering
statement.
Statutory Authority: MS s
45.023;
80C.18
