Minnesota
Franchise Registration
Minnesota
Minnesota is a franchise registration state.
Minnesota Franchise Law
Per Minnesota law “Franchise” means (1) a contract or agreement, either express or implied, whether oral or written, for a definite or indefinite period, between two or more persons:
- by which a franchisee is granted the right to engage in the business of offering or distributing goods or services using the franchisor’s trade name, trademark, service mark, logotype, advertising, or other commercial symbol or related characteristics;
- in which the franchisor and franchisee have a community of interest in the marketing of goods or services at wholesale, retail, by lease, agreement, or otherwise; and
- for which the franchisee pays, directly or indirectly, a franchise fee; or
- a contract, lease, or other agreement, either express or implied, whether oral or written, for a definite or indefinite period, between two or more persons, whereby the franchisee is authorized, permitted, or granted the right to market motor vehicle fuel at retail under the franchisor’s trade name, trademark, service mark, logotype, or other commercial symbol or related characteristics owned or controlled by the franchisor; or
- the sale or lease of any products, equipment, chattels, supplies, or services to the purchaser, other than the sale of sales demonstration equipment, materials or samples for a total price of $ 500 or less to any one person, for the purpose of enabling the purchaser to start a business and in which the seller:
- represents that the seller, lessor, or an affiliate thereof will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, or similar devices, or currency operated amusement machines or devices, on premises neither owned or leased by the purchaser or seller; or
- represents that the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using, in whole or in part, the supplies, services, or chattels sold to the purchaser; or
- guarantees that the purchaser will derive income from the business which exceeds the price paid to the seller; or
- an oral or written contract or agreement, either expressed or implied, for a definite or indefinite period, between two or more persons, under which a manufacturer, selling security systems through dealers or distributors in this state, requires regular payments from the distributor or dealer as royalties or residuals for products purchased and paid for by the dealer or distributor. Minn. Stat. § 80C.01.
Minnesota Franchise Registration Filing
The initial filing fee is $400 and must be accompanied by the following documents:
- Uniform Franchise Registration Application with Certification
- Uniform Franchise Consent to Service of Process
- Corporate Acknowledgement
- Franchisor's Costs and Source Funds
- Consent of Accountant
- Franchise Seller Disclosure Form
- Franchise Advertising Material
- A Clean Copy of the Franchise Disclosure Document
Minnesota Fee Deferral
Minnesota may require a fee deferral, which requires a deferment on the payment of initial franchise fees until the franchisor has completed its pre-opening obligations and is open for business. Minn. Stat. § 80C.05.
Minnesota does have a Surety bond and Escrow option. The Escrow option requires a bank with branches in Minnesota to serve as an Escrow Agent. The Escrow option requires both Minnesota and Franchisee Approval to release funds.
Since Minnesota requires the franchisee to be open for business, the surety bond is a great option, especially where there is a buildout so the franchisor can receive the initial franchise fee without an extended delay.
However, a surety bond requires a franchisor to apply for the bond, go through underwriting, give a personal guarantee in some situations, and pay a premium of 1-3% of the bond amount normally.
The Fee Deferral requirement is generally an easier path with less state involvement, but it may not be suitable for everyone.
The franchisor deposits all franchisee fees within two days of receipt in an escrow account until all obligations of the franchisor to the franchisee which are, pursuant to the terms of the franchise agreement, to be performed prior to the opening of the franchise, have been performed. The franchisor shall provide the franchisee with a purchase receipt for the franchise fees paid, a copy of the escrow agreement and the name, address and telephone number of the escrow agent. The escrow agent shall be a bank located in Minnesota. Upon a showing of good cause the commissioner may waive the escrow of franchise fees. Minn. Stat. § 80C.03.
Minnesota Franchise Advertising Material
No person shall publish or cause to be published in this state any advertisement offering a franchise subject to the registration requirements of sections 80C.01 to 80C.22 unless a true copy of the advertisement has been filed in the office of the commissioner at least five business days prior to the first publication thereof, or at such later time as the commissioner by rule or order may allow, unless such advertisement has been exempted by rule of the commissioner. Minn. Stat. § 80C.09.
Minnesota Franchise Renewals
The renewal filing fee is $300 and must be accompanied by the following documents:
- Uniform Franchise Registration Application with Certification
- Uniform Franchise Consent to Service of Process
- Corporate Acknowledgement
- Franchisor's Costs and Source of Funds
- Consent of Accountant
- Franchise Seller Disclosure Form
- A Clean and Marked Copy of the Franchise Disclosure Document
- Franchise Advertising Material
Minnesota Franchise Relationship and Termination Law
No person may terminate or cancel a franchise unless: (i) that person has given written notice setting forth all the reasons for the termination or cancellation at least 90 days in advance of termination or cancellation, and (ii) the recipient of the notice fails to correct the reasons stated for termination or cancellation in the notice within 60 days of receipt of the notice; except that the notice is effective immediately upon receipt where the alleged grounds for termination or cancellation are:
(1) voluntary abandonment of the franchise relationship by the franchisee;
(2) the conviction of the franchisee of an offense directly related to the business conducted pursuant to the franchise; or
(3) failure to cure a default under the franchise agreement which materially impairs the good will associated with the franchisor’s trade name, trademark, service mark, logotype or other commercial symbol after the franchisee has received written notice to cure of at least 24 hours in advance thereof.
(b) No person may terminate or cancel a franchise except for good cause. “Good cause” means failure by the franchisee to substantially comply with the material and reasonable franchise requirements imposed by the franchisor including, but not limited to:
(1) the bankruptcy or insolvency of the franchisee;
(2) assignment for the benefit of creditors or similar disposition of the assets of the franchise business;
(3) voluntary abandonment of the franchise business;
(4) conviction or a plea of guilty or no contest to a charge of violating any law relating to the franchise business; or
(5) any act by or conduct of the franchisee which materially impairs the good will associated with the franchisor’s trademark, trade name, service mark, logotype or other commercial symbol. Minn. Stat. § 80C.14.
More Information About Minnesota's Franchise Laws
Minnesota Franchise Registration Laws
Minnesota Business Opportunity Laws
In Minnesota, business opportunities fall under the state’s franchise laws and are subject to the same filing, registration, and disclosure laws. MN Stat § 80C.01 Subd. 4. (a)(3).
Want to learn more about our franchise services and franchising in Minnesota? Contact Us or call (757)-263-4596 to schedule a consultation. You can also visit our interactive map to learn more about other state franchise laws.
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