North Dakota Franchise Registration
North Dakota is a Mid-Western state known for its high production of agricultural products, hardworking population, and thriving economy. The state has a friendly tax rate which has drastically created a thriving environment for startups and improved the quality of life. North Dakota has seen an annual increase in the GDP since 2008, with productivity growing at a rate of 2.4% percent. In addition, the states provide low tax rates to corporates, attracting businesses and investors. Aside from the principal attractions which bring people from across the country, the state is ranked among the top 5 states with opportunities in education, health, economy, and community.
North Dakota is a franchise registration state, which requires franchisors to register their Franchise Disclosure Documents (FDD) with the North Dakota Securities Department before offering or selling a franchise. In addition, the Securities Department enforces the state’s Franchise Investment laws, also known as North Dakota’s franchise law, and ensures that all requirements are followed. The state’s initial filing fee is $250 and an annual renewal fee of $100.
When submitting your franchise registration application in North Dakota, you are required to include a filing and renewal fee in a check payable to the “North Dakota Securities Department” uniform franchise registration application, seller’s disclosure form, auditor’s consent form, samples of advertising materials, and one complete copy of the FDD and on CD-ROM. Failure to submit your application with either of these documents, you risk an unsuccessful registration.
After submitting your application to the relevant authorities, you will be assigned a franchise examiner to review your Franchise Disclosure Document and franchise filling. Once the franchise examiner is done with the assessment, they will send a comment letter requesting necessary modifications to your Franchise Disclosure Document concerning North Dakota’s franchise laws.
The franchise examiner will usually condition your registration approval grounded on your agreement to defer initial franchise fees or post a bond for franchisors who have limited finances. North Dakota FDD registration process usually takes between 4 to 6 weeks before you are approved. After you have been approved, the franchise examiner will send you a letter advising you on your FDD registration approval, your registration’s date in effect, and the annual date of expiration.
However, the state franchise laws have restrictions on dispute resolution between franchisees and franchisors and must be handled in compliance with the law to avoid infringements. For example, North Dakota franchise law dictates that all disputes need to be solved through arbitration in a remote location; you require consent to a jurisdiction outside North Dakota, consent to termination penalties and liquidated damages, waivers of punitive damages, and waivers of a jury trial.
Franchisors need to exercise care when preparing franchise registration documents so that they avoid improper terms. Your Franchise Disclosure Document needs to contain all appropriate provisions so that potential franchisees have all the relevant information before investing.
For more information on how to register your franchise in North Dakota, visit the Franchise Marketing Systems site: https://www.fmsfranchise.com/learn/resources/state-guidelines/
