37-5B-1. Definitions. Terms used in this chapter, unless the context otherwise requires, mean: (1)”Action,” any complaint, cross claim, counterclaim, and third-party complaint in a judicial action or proceeding, and their equivalent in an administrative action or arbitration; (2)”Affiliate,” any entity controlled by, controlling, or under common control with another entity; (3)”Confidentiality clause,” any contract, order, […]
37-5B-10. Negotiation of terms. This chapter does not prevent the negotiation of the terms and conditions of a franchise before it is sold. After the initial offer, a franchisor need not amend its disclosure document to negotiate with an offeree, or make supplementary disclosure to that offeree, by reason of a change negotiated in the […]
37-5B-11. Signed receipt. The person offering or selling any franchise subject to the requirements of §§37-5B-17 and 37-5B-18 shall obtain a receipt, signed by the prospective franchisee, acknowledging that the prospective franchisee has received a copy of the disclosure document prior to the prospective franchisee affixing a signature to any franchise or other agreement and […]
37-5B-12.Exemptions from chapter. The following are exempt from this chapter: (1)Any franchise relationship covered by the Petroleum Marketing Practices Act, 15 U.S. C. 2801, as of January 1, 2008; (2)Any franchise relationship where there is no written document that describes any material term or aspect of the relationship or arrangement; (3)Any fractional franchise; (4)Any leased […]
37-5B-13. Exemptions from notice filing and obligations to deliver disclosure document. The following franchises are subject to this chapter but are exempt from §§37-5B-4 and 37-5B-17, if any of the following conditions are satisfied: (1)The franchisee’s initial investment, excluding any financing received from the franchisor or an affiliate, and excluding the cost of unimproved land, […]
37-5B-14. Exemptions from notice filing. The following franchises are subject to this chapter but are exempt from §37-5B-4 if any of the following conditions are satisfied: (1)The offer or sale to an existing franchisee of an additional franchise that is substantially the same as the franchise that the franchisee has operated for at least two […]
37-5B-15. Exemptions by director. The director may by rule or order exclude the offer and sale of a franchise from the requirements of §§37-5B-4 and 37-5B-17 if the filing or disclosure is not necessary or appropriate in the public interest or for the protection of prospective franchisees. Source: SL 2008, ch 203, §15.
37-5B-16. Thresholds. For purposes of the exemptions set forth in subdivision 37-5B-12(5) and subdivisions 37-5B-13(1) and (2), the director may adjust by rule or order the size of the thresholds. Source: SL 2008, ch 203, §16.
37-5B-17. Delivery of disclosure document. In connection with the offer or sale of a franchise in this state, unless the transaction is exempted by the provisions of §§37-5B-12 to 37-5B-16, inclusive, it is a prohibited practice and a violation of this chapter for any person, directly or indirectly, to: (1)Fail to furnish a prospective franchisee […]
37-5B-18. Time of delivery of disclosure document. For purposes of subdivisions 37-5B-17(1) and (2), the franchisor has furnished the disclosure documents by the required date if: (1)A copy of the disclosure document was hand-delivered, faxed, e-mailed, or otherwise delivered to the prospective franchisee by the required date; (2)Directions for accessing the disclosure document on the […]
37-5B-19. Books and records. Every franchisor offering or selling a franchise in this state shall maintain complete and accurate books and records of the offers and sales of franchises. The books and records shall include all of the disclosure documents and advertising and correspondence that have been used with franchisees and prospective franchisees including past […]
37-5B-2. Jurisdiction. This chapter applies to any franchise that is offered or sold in this state. A franchise is offered in this state if: (1)An offer to sell is made in this state; (2)The offer originates from within this state; or (3)The offer is directed by the offeror into this state from outside this state […]
37-5B-20. Burden of proof. In any proceeding under this chapter the burden of proving an exemption is upon the person claiming it. Source: SL 2008, ch 203, §20.
37-5B-21. Arbitration. A written provision in a franchise contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of the contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of the […]
37-5B-22. Consent to service of process. Each applicant for notice filing under this chapter, and each franchisor on whose behalf an application for notice filing is filed, except any applicant and franchisor which are domestic South Dakota entities, shall file with the director an irrevocable consent to service of process. The irrevocable consent to service […]
37-5B-23. Advertisement. No person may publish or cause to be published in this state any advertisement concerning any franchise after the director has found that the advertisement contains any statement that is false or misleading or omits to make any statement necessary in order to make the statements made, in light of the circumstances under […]
37-5B-24. Fraud–Class 4 felony. No person may, directly or indirectly, employ a device, scheme, or artifice to defraud in connection with the offer or sale of a franchise. A violation of this section is a fraudulent practice and a Class 4 felony. Source: SL 2008, ch 203, §24.
37-5B-25. Fraud–Class 6 felony. No person may, directly or indirectly, in connection with the offer or sale of a franchise willfully: (1)Make an untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not […]
37-5B-26. Prohibited practices. No person may, directly or indirectly, in connection with the offer or sale of a franchise: (1)Make any claim or representation, orally, visually, or in writing, that contradicts the information required to be in the disclosure document; (2)Misrepresent that any person: (a)Purchased a franchise from the franchisor or operated a franchise of […]
37-5B-27. Director approval not permitted. The director may not approve or express any opinion on the legality of any matter a franchisor may be required to disclose under this chapter. Source: SL 2008, ch 203, §27.
