Minnesota Franchise Registration

Minnesota Franchise Registration

Minnesota is ranked the seventh-best state in the country when it comes to business. Located at the United States and Canada border, the state thrives in technology and innovation, life and health, infrastructure, and education. However, the cost of doing business in the state is slightly high compared to other states, but this depends on an individual’s point of view. If you consider the cost of office space, state’s taxes, and wage costs, the state ranks as the best Midwestern state that is conducive for businesses. The state’s corporate tax rate is one of the highest and the minimum wage compared to other states.

Minnesota is among the franchise registration states if you intend to offer or sell a franchise. As a franchisor, you are required to register your Franchise Registration Document (FDD) with the Securities Division of the Minnesota Department of Commerce. The Securities Division has to supervise FDD registration and enforcement of the Minnesota Franchise Act.  After your FDD registration, you will be required by law to renew it annually. The state’s initial FDD filing fee is $400 and a renewal fee of $200, but if your renewed FDD contains changes from the previous year, the renewal fee is $300.

When registering your Franchise Disclosure Document, you will be required to present a Uniform Franchise Registration Application with a Certification form, franchisor’s cost and sources of funds, seller’s disclosure form, and an accountant consent letter to audit financial statements. Although the state offers online FDD filing, this method is only limited to FDD renewal and amendment. During the initial registration process, a franchisor must also present a single hard copy of the FDD, and another marked to show changes. The electronic FDD filing system used by the Commerce Department is known as ComOnline, and it is also used for FDD renewals and amendments.

After a franchisor registers a franchise, it takes up to one month before it is approved. Confirmation of your registration usually takes place through the Department’s date-stamped mailing of your cover letter. Once you receive the confirmation, it is advisable to call the Department to confirm the registration status. Usually, the Department doesn’t evaluate the disclosures contained in your Franchise Disclosure Document, and it’s essential to ensure your FDD complies with the Minnesota Franchise Act.

The Minnesota Franchise Act has various provisions that afford franchisees supplementary rights and prohibit specific franchise agreement provisions and practices. These provisions include litigation and liquidated damage prohibitions, which prohibit franchisors from requiring litigation to be conducted outside the state. This franchise agreement provision also allows franchisees to waive the right to a jury trial and refuses consent to liquidated damages. Other provisions under the Minnesota Franchise Act include franchise termination and nonrenewal requirements and general release.

For more information on how to register your franchise in Minnesota, visit the Franchise Marketing Systems site:  www.FMSFranchise.com/about-franchising/guidelines/stateregulations

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