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ND Securities Department
600 East Boulevard Avenue
State Capitol, 5th Floor
Bismarck, ND 58505-0510
Phone: (701)-328-2910
Toll Free: (800)-297-5124
Fax: (701)-328-2946
Grafton Office
701 W 6th Street, #312
Grafton, ND 58237
Phone: 701-352-4592

Franchise Registration & Renewal

Key spelling out business

Registration of Franchises

North Dakota Franchise Investment Law ("NDFIL") Section 51-19, North Dakota Century Code ("NDCC"). Any person or company that intends to offer or sell franchises (a "franchisor") within North Dakota or to North Dakota residents must register its franchise disclosure with the Securities Department. A franchisor must also give a prospective franchisee a copy of the disclosure document at least 14 days before the execution of a franchise agreement.

  1. Documents to be filed: (Submit one copy of each)
    Franchise Disclosure Document (FDD) consisting of:
    • Cover Letter
    • Application Page
    • Franchisor's Costs and Sources of Funds Form
    • Auditor's Consent Form
    • Uniform Consent to Service of Process
    • Certification Page
    • Salesman Disclosure Forms
    • Proposed unbound FDD or CD-ROM
    • Advertising Proposed for use in North Dakota
  2. Filing Fee: NDCC Section 51-19-17. Original registration fee, $250.00 payable to the "North Dakota Securities Department."
  3. Registration Period: NDCC Section 51-19-07. A franchise offering shall be deemed duly registered for a period of one year from the effective date of the registration unless the Commissioner by order or rule specifies a different time.

Financial Assurances: NDCC Section 51-19-07, the Commissioner will require one form of financial assurances for those initial startup franchise registrations that submit unaudited opening balance statements. Additional information and forms can be found at Franchise Funds Packet.
THE SECURITIES COMMISSIONER HAS HELD THE FOLLOWING TO BE UNFAIR, UNJUST OR INEQUITABLE TO NORTH DAKOTA FRANCHISEES (NDCC SECTION 51-19-09):

  1. Restrictive Covenants: Franchise disclosure documents that disclose the existence of covenants restricting competition contrary to NDCC Section 9-08-06, without further disclosing that such covenants will be subject to the statute.
  2. Situs of Arbitration Proceedings: Franchise agreements providing that the parties must agree to the arbitration of disputes at a location that is remote from the site of the franchisee's business.
  3. Restrictions on Forum: Requiring North Dakota franchisees to consent to the jurisdiction of courts outside of North Dakota.
  4. Liquidated Damages and Termination Penalties: Requiring North Dakota franchisees to consent to liquidated damages or termination penalties.
  5. Applicable Laws: Franchise agreements that specify that they are to be governed by the laws of a state other than North Dakota.
  6. Waiver of Trial by Jury: Requiring North Dakota Franchises to consent to the waiver of a trial by jury.
  7. Waiver of Exemplary & Punitive Damages: Requiring North Dakota Franchisees to consent to a waiver of exemplary and punitive damage.
  8. General Release: Franchise Agreements that require the franchisee to sign a general release upon renewal of the franchise agreement.
  9. Limitation of Claims: Franchise Agreements that require the franchisee to consent to a limitation of claims. The statute of limitations under North Dakota law applies.
  10. Enforcement of Agreement: Franchise Agreements that require the franchisee to pay all costs and expenses incurred by the franchisor in enforcing the agreement. The prevailing party in any enforcement action is entitled to recover all costs and expenses including attorney's fees.

The above restrictions should be addressed with a State specific addendum to the Disclosure Document for North Dakota.
To obtain a copy of the Franchise Disclosure Document (FDD) interim State guidelines from the North American Securities Administrators Association ("NASAA") from the internet at www.nasaa.org then "Industry Resources" then "Franchise Resources" then to 2008 Franchise Registration and Disclosure Guidelines or http://www.nasaa.org/wp-content/uploads/2011/08/6-2008UFOC.pdf.

Renewal Requirements:

NDCC Section 51-19-07. Registration renewal application must be filed no later than fifteen business days prior to the expiration of the registration unless such period is waived by order of the Commissioner.

  1. Documents to be filed: (Submit one copy of each)
    Franchise Disclosure Document (FDD) consisting of:
    • Cover Letter
    • Application Page
    • Franchisor's Costs and Sources of Funds Form
    • Auditor's Consent Form
    • Certification Page
    • Salesman Disclosure Forms
    • Proposed unbound complete FDD (hard copy or CD-ROM) with BLACKLINED changes
    • Any advertising not previously filed
  2. Filing Fee: $100.00 payable to "North Dakota Securities Department."

Amendment Requirements:

NDCC Section 51-19-07. A franchisor shall promptly notify the Commissioner in writing of any material change in the information contained in the application are originally submitted, amended or renewed.

  1. Documents to be filed: (Submit one copy of each)
    FDD Format consisting of:
    • Cover Page
    • Signature Page
    • BLACKLINED unbound amended pages only (disclosure by CD-ROM is encouraged)
  2. Filing Fee: $50.00 payable to "North Dakota Securities Department"

Related Items

Century Code

Rules & Laws

Administrative Rules

Title 73 of the North Dakota Administrative Code contains the rules adopted by the Securities Commissioner to assist in the interpretation and implementation of the Securities Act, Franchise Investment Law, and Pre-need Funeral Services Act.

Publications

Franchise Funds Packet (8.467 MB pdf)

Links