North Dakota
Franchise Registration
North Dakota
North Dakota is a franchise registration state. A franchisor must register its Franchise Disclosure Document (FDD) with the Securities Division of the North Dakota Insurance Department before offering or selling a franchise in North Dakota or to a North Dakota resident unless an exemption applies.
North Dakota Franchise Laws
The North Dakota Franchise Investment Law defines a franchise as an agreement under which the franchisee receives the right to offer, sell, or distribute goods or services under a marketing plan or system prescribed in substantial part by the franchisor; the franchisee’s business is substantially associated with the franchisor’s trademark, service mark, trade name, advertising, or other commercial symbol; and the franchisee must pay a direct or indirect franchise fee. (N.D.C.C. § 51-19-02)
Franchisors must also comply with the Federal Trade Commission’s (FTC) Franchise Rule, which requires providing a current FDD to prospective franchisees at least 14 calendar days before execution of any agreement or payment of any consideration.
North Dakota Franchise Registration Filing
A franchisor must register before offering or selling a franchise in North Dakota. All filings and fee payments must be submitted through the NASAA Electronic Filing Depository (EFD). The initial registration includes the Uniform Franchise Registration Application (Form A) and related uniform forms, a consent to service of process, a complete FDD, copies of advertising proposed for use in North Dakota, and a $250 registration fee.
Registration becomes effective when the Commissioner enters the offering in the franchise register and generally remains effective for 12 months. (N.D.C.C. §§ 51-19-03, 51-19-06, and 51-19-07)
A franchisor must promptly file an amendment, with a $50 fee, disclosing any material change in the information contained in the registration as originally submitted, amended, or renewed. An amendment becomes effective on the date determined by the Commissioner after approval.
A renewal application must be filed no later than 15 business days before the registration expires, unless the Commissioner waives that deadline. The renewal includes updated uniform forms, a current FDD, a marked FDD showing changes from the prior filing, any advertising not previously filed, and a $100 renewal fee. (N.D.C.C. § 51-19-07)
North Dakota Franchise Registration Exemptions
North Dakota exempts certain experienced and financially established franchisors from registration. To qualify, the franchisor generally must have a consolidated net worth of at least $10 million, or a net worth of at least $1 million with at least 80% ownership by a corporation with a consolidated net worth of at least $10 million. The franchisor or qualifying parent must also generally have had at least 25 franchisees continuously operating during the preceding 5 years or have continuously operated the type of business covered by the franchise for at least 5 years.
The franchisor must file a notice of exemption through the EFD before relying on the exemption, with a $100 filing fee. The exemption remains effective for 1 year and may be renewed with an updated filing and a $50 renewal fee. Other exemptions may apply to certain sales by existing franchisees and transactions exempted by the Commissioner. (N.D.C.C. § 51-19-04)
North Dakota Franchise Relationship and Termination Laws
North Dakota does not have generally applicable franchise relationship or termination laws. It does not impose franchise-specific good-cause termination requirements, nonrenewal restrictions, or general notice and cure obligations. The terms of the franchise agreement and general contract law principles govern franchise relationships, renewals, transfers, and terminations.
North Dakota Financial Assurance Requirements
The Commissioner may require financial assurances when a startup franchisor submits an unaudited opening balance sheet and has not demonstrated adequate resources to perform its preopening obligations. Available options include escrowing initial franchise fees, providing a performance guaranty from a financially qualified parent, posting a surety bond equal to the anticipated franchise fees (minimum $25,000), or deferring collection of initial franchise fees until the franchisor fulfills its initial obligations and the franchisee opens for business. (N.D.C.C. § 51-19-07)
North Dakota Business Opportunity Laws
North Dakota does not maintain a separate business opportunity registration statute. However, a business opportunity may be regulated under the North Dakota Franchise Investment Law if the arrangement satisfies North Dakota’s definition of a franchise.
More Information About North Dakota's Franchise Laws
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If you offer a business opportunity in North Dakota, we can help you determine if, and how, your company must comply with North Dakota’s Franchise or Business Opportunity Laws.
Franchise Compliance in North Dakota
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