South Dakota Franchise Registration

South Dakota Franchise Registration

If you are looking for a place to start or relocate your business, South Dakota needs to be at the top of your list of options. The state is considered one of the best places to do business because of its limited taxes, reasonable regulations, and balanced budget, which enable companies to reach their full potential. South Dakota imposes no individual and corporate income tax, business inventory tax, and personal property tax, providing businesses with the freedom to reinvest in their continued growth. In addition, unlike most business communities, South Dakota can break down barriers to decision-making and leadership by putting collaboration first.

Before offering or selling a franchise, South Dakota is a franchise filing state, where you are required to file a notice with a copy of your Franchise Disclosure Document with the Division of Insurance and Securities Regulation of South Dakota Department of Labor and Regulation. The state differs from other franchise registration states; South Dakota does not assign an examiner to review your FDD or registration process. However, franchisors file a “Notice Filing” with the state before offering or selling a franchise. The state’s initial filing fee is $250 and an annual renewal fee of $150, which should be renewed every year.

South Dakota has enacted extensive franchise laws and regulations because it is a franchise filing state. All franchisors are therefore required to include a copy of their Franchise Disclosure Documents when filing a notice. Since South Dakota does not have to register or review your FDD, you need to certify that all the information in your FDD is accurate. Once you receive a receipt from the director, you should confirm its effectiveness before offering or selling franchises in the state.

Your franchise notice should include an application and an initial filing fee which is payable to the South Dakota Division of Securities. A copy of the Franchise Disclosure Document in electronic pdf format on CD-ROM should also be included in your franchise notice. The state notice filing is effective for a year before you are required to renew it. However, filing is not allowed 30 days before it took effect or 120 days after the same date. Failure to renew your filing at the end of the fiscal year, you risk breaking Federal Franchise Law.

There are exemptions to South Dakota Franchise Filing Notice if the Petroleum Marketing Practices Act governs franchise transactions. Other reasons for exemption are; if there’s no written evidence of the terms of the franchise relationship, leased departments, fractional franchises, and franchise relationships covering farm machinery. Therefore, franchisors are advised to seek legal counsel before relying on an exemption to determine whether they qualify. Consulting a lawyer also helps you navigate through state and federal franchise laws to avoid penalties or fines.

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

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