The Minnesota Franchise Act and rules define franchises and exemptions; establish registration criteria, procedures, and fees; set requirements for public offering statements; define unfair and prohibited practices; mandate the keeping of books and records; establish enforcement standards, and provide for imposition of civil liability for violations. The Act and rules also address issues like termination and notice periods for non-renewal of franchises, liquidated damages, termination penalties, arbitration, security deposits and governing law. Minnesota accepts franchise applications which comply with the Uniform Franchise Offering Circular (UFOC) Guidelines of the North American Securities Administrators Association. The UFOC Guidelines prescribe disclosures that a franchisor must make available to prospective franchisees, and require that franchisors supply prospective franchisees with audited financial statements and copies of all proposed contracts and agreements pertaining to the proposed franchise relationship. MINNESOTA DEPARTMENT OF COMMERCE ENFORCEMENT ACTIONS The Enforcement Division of the Minnesota Department of Commerce investigates complaints against companies selling franchises and business opportunities. Action can be taken only when a violation of the Minnesota Franchise Law has occurred. Enforcement actions can be viewed on the Minnesota Department of Commerce website. Contact information is the Resource Directory section of this Guide. OTHER ENFORCEMENT AND INFORMATION ASSISTANCE In addition to the regulation done by the State of Minnesota, the United States Federal Trade Commission (FTC) has regulatory authority over the sellers of franchises and business opportunities. Pursuant to Section 5 of the Federal Trade Commission Act, the FTC has issued its filing complaints about franchises and business opportunities. The National Fraud Information Center (NFIC) assists the FTC and state Attorneys General by entering complaints into a computerized database to help track and identify operators of frauds. Along with its enforcement activities, the FTC issues a number of articles and publications designed to educate potential buyers and sellers of franchises and business opportunities. Examples are: A Consumer’s Guide to Buying a Franchise , explains how to shop for a franchise opportunity, the obligations of a franchise owner, and questions to ask before investing ; Advertising FAQs: A Guide for Small Business , an A-Z primer focusing on the federal truth-in advertising standards: Selling a Work-at-Home or Other Business Opportunity? Revised Rule ay Apply to You, and Complying with the Telemarketing Sales Rule Articles and publications are available at FTC Business Guidance. Also available on the FTC website is information regarding Case Highlights; Compliance Documents; Laws, Rules, Reports, and Guides. EXEMPTIONS There are eight registration exemptions available under Minn. Stat. § 80C.03. These include sale of a franchise by a franchisee-owner; sales by an executor, administrator, sheriff, trustee in bankruptcy, guardian or conservator; sales to a bank or insurance company; sales of registered securities; a single isolated sale of a franchise under specified conditions; the sale of a franchise
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