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Franchise Lawyers Serving Minnesota

What You Need to Know About Franchising

Minnesota

Minnesota may make the Top 10 list for the richest states in the U.S., but they are modest. Theirs is an economy that boasts affordability and job opportunity – a good place to put down roots and work toward the American dream.

It’s important you educate yourself before selling franchises or buying a new or existing franchise in Minnesota so that you know what legal requirements and protections exist for both buyers and sellers. Minnesota is a franchise registration state, with an initial filing fee of $400. The annual renewal cost is $300.


Minnesota Franchise Filing Fees

$400

Initial

$300

Renewal*

$100

Post-Effective Amendment**

*Renewal filings must be submitted within 120 days after your fiscal year end or Minnesota will require the filing be resubmitted as a new initial filing with payment of the initial fee. The filing fee is $300 for each renewal filing that includes a material change, and in general, this will be the case for your renewals. Your Spadea legal team will advise you should you qualify for a $200 filing fee (available in cases where your renewal filing does not include a material change).

**Post-Effective Amendment filings must be submitted if you are making a material change to your FDD after your initial or renewal filing is approved. Pre-Effective Amendment filings are submitted if you are making a material change to your FDD but your initial filing or renewal filing is not yet approved. No further sales may be made in Minnesota until the amended FDD is approved and the registration is effectively amended.

Notes

Minnesota requires notary on the application required for each filing.

The filing fees for all filings must be made via check payable to “Minnesota Commerce Department”.

Audited financials are required for initial and renewal filings in Minnesota. The state may also require the submission of unaudited financials to supplement the audit in certain circumstances.

No deals may be closed in Minnesota until the initial, renewal or amendment filing is approved, and all Minnesota prospects must be disclosed/redisclosed with the approved FDD.

Financial Assurance – If the Commissioner finds there is a lack of adequate financial arrangements to fulfill obligations to the franchisees, the Commissioner may require the escrow, impoundment, or deferral of franchise fees until the franchised business has opened to the public. In certain circumstances, the Commissioner may allow the posting of a surety bond in lieu of the other forms of financial assurance.

Advertising – Any advertising that will be used by you to target prospects in Minnesota or will be published and used only in Minnesota must be filed with the state at least five days prior to its first use. If the state does not provide written disapproval within three business days from the filing date, the advertising may be used.

Did You Know?

The Twin Cities – Minneapolis and St. Paul – are the cultural hub of the state. Minneapolis has surpassed Washington D.C. as America’s Most Literate City.

(mentalfloss.com)

Known as the Land of 10,000 Lakes, but the state has more than 11,000, aiding the $16 billion tourism industry.

(mn.gov)

1% of Minnesota residents are farmers, though the agricultural output is the biggest industry in the state.

(worldatlas.com)

Minnesota Franchise Exemptions

Fractional Franchises – exemption from registration and disclosure

Sales to Existing Franchisees – exemption from registration and disclosure

Renewal of an Existing Agreement – exemption from registration and disclosure

Isolated Sales – exemption from registration and disclosure

Sales by Existing Franchisees – exemption from registration and disclosure

Sales by Executor, Trustee, Etc. – exemption from registration and disclosure

Out-of-State Sales – exemption from registration and disclosure

Non-Franchisor Exemptions

CORE

Flat Fee Program for Franchisors

Spadea Lignana’s CORE program for franchisors is a cost-effective and practical solution for the ongoing legal needs of franchisors, including but not limited to, FDD updates, state registrations and franchise agreement executions. Through a proprietary cloud-based system we can effectively and efficiently manage FDD Disclosures and Franchise Agreement executions for fair flat fees billed monthly. We believe that hourly billing, although necessary in certain circumstances like complex M&A deals and litigation, can weigh on the relationship between client and attorney.  By coming up with a fair flat monthly fee, the uncomfortable negotiating of whether or not a 6 minute increment in your bill for replying to an email was legitimate goes away.

Start With a Free Consultation

Attorneys Who Understand MN Franchise Law

Franchise laws vary from state to state, and it can be difficult to understand the requirements. Spadea Lignana has streamlined the process to ensure you remain compliant as you grow nationally.

We also work with franchises in Michigan, Wisconsin, and Illinois.

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