Indiana Code 23-2-2.5-3. Exempt franchisors; number of Indiana franchises; net worth; business experience; disclosures to franchisees
(1) has a net worth:
Terms Used In Indiana Code 23-2-2.5-3
- Affiliate: means any person who, directly or indirectly through one (1) or more intermediaries, controls, is controlled by, or is under common control with, the person to whom affiliation is attributed. See Indiana Code 23-2-2.5-1
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Franchise: includes a contract whereby the franchisee is granted the right to sell franchises on behalf of the franchisor. See Indiana Code 23-2-2.5-1
- Franchise fee: means any fee that a franchisee is required to pay directly or indirectly for the right to conduct a business to sell, resell, or distribute goods, services, or franchises under a contract agreement, including, but not limited to, any such payment for goods or services. See Indiana Code 23-2-2.5-1
- Franchisee: means a person to whom a franchise is granted. See Indiana Code 23-2-2.5-1
- Franchisor: means a person who grants a franchise. See Indiana Code 23-2-2.5-1
- in writing: include printing, lithographing, or other mode of representing words and letters. See Indiana Code 1-1-4-5
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Month: means a calendar month, unless otherwise expressed. See Indiana Code 1-1-4-5
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Service of process: The service of writs or summonses to the appropriate party.
- Year: means a calendar year, unless otherwise expressed. See Indiana Code 1-1-4-5
(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.