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Order Regarding Franchise Advertisement on the Internet

WHEREAS, The North Dakota Securities Commissioner is charged with the administration of North Dakota's Franchise Investment law (N.D.C.C. Ch. 51-19); and,

WHEREAS, Section 51-19-10 N.D.C.C. provides, in relevant part, that no person may publish in this state any advertisement offering a franchise required to be registered under the Franchise Investment Law unless the advertisement has been filed with the administrator at least five business days prior to its first publication; and,

WHEREAS, Section 51-19-02(1) defines "advertisement" to include a communication published in connection with an offer or sale of a franchise; and,

WHEREAS, Section 51-19-17(3) allows the Commissioner to promulgate rules, forms and orders necessary or appropriate to administer the Franchise Investment Law and may define terms, whether or not used in the Franchise Investment law. As such, the Securities Commissioner may classify franchises, persons and matters within the Securities Commissioner's discretion and prescribe different rules for different classes; and,

WHEREAS, The Securities Commissioner recognizes that communication on the Internet about a franchise offering may be construed as advertising requiring the person making that communication to file that communication with the Securities Commissioner; and,

WHEREAS, The Securities Commissioner finds that it is necessary and appropriate in the public interest and for the protection of North Dakota franchisees to require that Internet advertising be filed with the Securities Commissioner under certain circumstances;

NOW, THEREFORE, THE NORTH DAKOTA SECURITIES COMMISSIONER HEREBY ORDERS THAT:

  • Pursuant to section 51-19-17(3) N.D.C.C., any communication about a franchise offering posted on a website on the Internet is exempted from the requirements for filing advertisement with the Securities Commissioner if the following conditions are observed:
    • The franchisor discloses to the Securities Commissioner the Uniform Resource Locator (URL) address or similar address or device identifying the location of the Internet Advertising: (1) on the cover page of a franchise offering circular included with an application for registration that is effective in North Dakota; (2) on the cover page of a franchise offering circular included with an application for exemption from registration on file with the Securities Commissioner; or (3) on a notice filed with the Securities Commissioner; and,
    • The Internet Advertising is not directed to any person in North Dakota by or on behalf of the franchisor or anyone acting with the franchisor's knowledge.
  • Nothing in this Order shall not be construed to affect the Securities Commissioner's ability to bring an action against any person for violating any antifraud provision of the North Dakota Franchise Investment law, or any other provision of the Franchise Investment Law not specifically limited by this Order.

This Order shall remain in effect until modified or rescinded by the Securities Commissioner. Signed and Sealed this 2nd day of April, 2002. Karen J. Tyler, Securities Commissioner Office of the Securities Commissioner 600 East Boulevard Ave. State Capitol - Fifth Floor Bismarck, ND 58505-0510 (701) 328-2910