2020 Indiana Code
Title 23. Business and Other Associations
Article 2. Securities and Franchises
Chapter 2.5. Franchises
23-2-2.5-3. Exempt Franchisors; Number of Indiana Franchises; Net Worth; Business Experience; Disclosures to Franchisees

Universal Citation: IN Code § 23-2-2.5-3 (2020)

Sec. 3. Sections 9 through 24 of this chapter do not apply to the offer or sale of a franchise if the franchisor either sells no more than one (1) franchise in Indiana in any twenty-four (24) month period or the franchisor:

(1) has a net worth:

(A) on a consolidated basis according to current financial statements certified by independent certified public accountants, of not less than five million dollars ($5,000,000); or

(B) according to current financial statements certified by independent certified public accountants of not less than one million dollars ($1,000,000) and is at least eighty percent (80%) owned by a corporation which has a net worth on a consolidated basis, according to current financial statements certified by independent certified public accountants, of not less than five million dollars ($5,000,000);

(2) has:

(A) had at least twenty-five (25) franchisees conducting business at all times during the five (5) year period immediately preceding the offer or sale; or

(B) conducted the business which is the subject of the franchise continuously for not less than five (5) years preceding the offer or sale;

or if any corporation which owns at least eighty percent (80%) of the franchisor has had at least twenty-five (25) franchisees conducting business at all times during the five (5) year period immediately preceding the offer or sale, or such corporation has conducted the business which is the subject of the franchise continuously for not less than five (5) years preceding the offer or sale; and

(3) discloses in writing to each prospective franchisee, at least ten (10) days prior to the execution by the prospective franchisee of a binding franchise or other agreement, or at least ten (10) days prior to the receipt of any consideration, whichever first occurs, the following information:

(A) The name of the franchisor, the name under which the franchisor is doing or intends to do business, and the name of any affiliate that will engage in business transactions with franchisees.

(B) The franchisor's principal business address and the name and address of its agent in Indiana authorized to receive service of process.

(C) The business form of the franchisor and the jurisdiction under which it was organized.

(D) The business experience of the franchisor, including the length of time the franchisor:

(i) has conducted a business of the type to be operated by the franchisee;

(ii) has granted franchises for that business; and

(iii) has granted franchises in other lines of business.

(E) A copy of the franchise contract proposed for use or in use in Indiana.

(F) A statement of the franchise fee charged, the proposed application of the proceeds of such fee by the franchisor, and the formula by which the amount of the fee is determined if the fee is not the same in all cases.

(G) A statement describing any payments other than franchise fees that the franchisee is required to pay to the franchisor or affiliated persons, including royalties or payments which the franchisor or affiliated persons collect in whole or in part on behalf of a third party or parties.

(H) A statement of the conditions under which the franchise may be terminated, renewal refused, or repurchased.

(I) A statement as to whether the franchisee is required to purchase from the franchisor or affiliates or their designee services, supplies, products, fixtures, or other goods relating to the establishment or operation of the franchised business, together with a description thereof.

(J) A statement as to whether the franchisee is limited in the goods or services offered by the franchisee to the franchisee's customers.

(K) A statement of the terms and conditions of any financing agreements.

(L) A statement of any past or present practice or of any intent of the franchisor to transfer to a third party any note, contract, or other obligation of the franchisee in whole or in part.

(M) If any financial statement concerning estimated profits or earnings is used, the data upon which the estimate is based.

(N) A statement as to whether the franchisee will receive an exclusive area or territory.

Formerly: Acts 1975, P.L.262, SEC.1. As amended by P.L.233-1985, SEC.1; P.L.152-2020, SEC.1.

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