§482E-3  Offering circular.  (a)  It is
unlawful for any person to sell a franchise in this State unless such person
has presented to the prospective franchisee or the franchisee's representative,
at least seven days prior to the sale of the franchise, an offering circular
containing the following information:



(1)  The name of the franchisor, the name under which
the franchisor is doing or intends to do business, and the name of any parent
or affiliated company that will engage in business transactions with
franchisees;



(2)  The franchisor's principal business address and
the name and address of the franchisor's agent in the State authorized to
receive service of process;



(3)  The business form of the franchisor whether
corporate, partnership, or otherwise;



(4)  Such other information concerning the identity
and business experience of persons affiliated with the franchisor including
franchise brokers and selling agents as the director may by rule prescribe;



(5)  A statement whether any person identified in the
offering circular, within ten years preceding the date of the offering
circular:



(A)  Has been found guilty of a felony or held
liable in a civil action by final judgment if the civil action involved fraud,
embezzlement, fraudulent conversion, or misappropriation of property; or



(B)  Is subject to any currently effective
order of the Securities and Exchange Commission or the securities administrator
of any state denying registration to or revoking or suspending the registration
of such person as a securities broker or dealer or investment adviser or is
subject to any currently effective order of any national security association
or national securities exchange (as defined in the Securities Exchange Act of
1934) suspending or expelling such person from membership in such association
or exchange; or



(C)  Is subject to any currently effective
order or ruling of the Federal Trade Commission or is subject to any currently
effective order relating to the business activity as a result of an action
brought by any public agency or department.



Such statement shall set forth the court, the
date of conviction or judgment, any penalty imposed or damages assessed, or the
date, nature, and issue of such order;



(6)  A statement of when, where, and how long the
franchisor has:



(A)  Conducted a business of the type to be
operated by the franchisees;



(B)  Has granted franchises for such business;
and



(C)  Has granted franchises in other lines of
business;



(7)  A recent financial statement of the franchisor,
together with a statement of any material changes in the financial condition of
the franchisor from the date of the financial statement.  The director may
prescribe:



(A)  The form and content of the financial
statements required under this chapter;



(B)  The circumstances under which consolidated
financial statements may be filed; and



(C)  The circumstances under which financial
statements shall be audited by independent, certified public accountants;



(8)  A copy of the typical franchise contract or
agreement proposed for use in this State;



(9)  A statement of the franchise fee charged, the
proposed application of the proceeds of the 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;



(10)  A statement describing a payment of fees other
than franchise fees that the franchisee or subfranchisor is required to pay to
the franchisor including royalties and payments or fees that the franchisor
collects in whole or in part on behalf of a third party or parties;



(11)  A statement of the conditions under which the
franchise agreement may be terminated or renewed or renewal refused, or
repurchased at the option of the franchisor;



(12)  A statement of the conditions under which the
franchise may be sold, transferred, or assigned;



(13)  A statement of the conditions imposed by the
franchisor whether by the terms of the franchise agreement or by other device
or practice whereby the franchisee or subfranchisor is required to purchase
services, supplies, products, fixtures, or other goods relating to the
establishment or operation of the franchise business from the franchisor or the
franchisor's designee;



(14)  A statement of any restriction or condition
imposed by the franchisor whether by the terms of the franchise agreement or by
other device or practice whereby the franchisee is limited or required in the
goods and services offered by the franchisee;



(15)  A statement of the terms and conditions of any
financing arrangements when offered directly or indirectly by the franchisor or
the franchisor's agent or affiliate;



(16)  A statement of any intent of the franchisor to
sell, assign, or discount to a third party any note, contract, or other
obligation of the franchisee in whole or in part;



(17)  A copy of any financial statement prepared for
presentation to prospective franchisees or other persons together with a
statement setting forth the basis for such statements;



(18)  A statement of the number of franchise businesses
in each of the following categories that within the three-year period preceding
the date of the offering circular have:



(A)  Been canceled or terminated by either the
franchisor or franchisee;



(B)  Not been renewed by either the franchisor
or franchisee;



(C)  Been reacquired through purchase by the
franchisor;



(D)  Been otherwise reacquired by the
franchisor; and



(E)  Been transferred or sold by the franchisee
to persons other than a corporation or other business entity controlled by the
transferring or selling franchisee;



(19)  A statement describing the training program,
supervision, and assistance the franchisor has and will provide the franchisee;



(20)  A statement as to whether franchisees or
subfranchisors receive an exclusive area or territory;



(21)  A statement of any compensation or other benefit
given or promised to a public figure arising, in whole or in part, from:



(A)  The use of the public figure in the name
or symbol of the franchise; or



(B)  The endorsement or recommendation of the
franchise by the public figure in advertisements;



(22)  Such other information as the director may
reasonably require;



(23)  Such other information as the franchisor may wish
to present;



(24)  When the person selling the franchise is a
subfranchisor, the offering circular shall also include the same information
concerning the subfranchisor as is required from the franchisor pursuant to
this subsection; and



(25)  List of names and addresses of all franchisees of
the franchisor whose franchise businesses are situated in this State.



(b)  If any material change occurs in the
information contained in the offering circular, the offering circular shall be
amended by the franchisor or subfranchisor before further sales of the
franchise are made in this State and the amended offering circular shall be
presented to a prospective franchisee at least seven days before a sale of a
franchise is made to the prospective franchisee.  The director may define by
rule material changes which require amendment of an offering circular.



(c)  There shall be filed with the director a
copy of the offering circular required under subsection (a) or the amended
offering circular required under subsection (b) at least seven days prior to
the sale of a franchise.



(d)  Every filing under this section shall
expire three months after the end of each franchisor's fiscal year. 
Applications for renewals shall be made not more than sixty days before the
expiration date.  An application for renewal shall be accompanied by the most
recently amended offering circular required under subsection (b).  Any
applicant for renewal of a franchise filing who submits the renewal application
after the expiration date shall be required to reapply as a new franchisor.



(e)  In lieu of an offering circular meeting
the requirements set forth in this section, franchises may be sold in this
State by means of an offering circular or disclosure statement required by a
federal or government agency of another state, or an offering circular or
disclosure statement meeting the requirements approved by an association of
state regulatory agencies; provided that the director determines that such
offering circular or disclosure statement substantially meets the disclosure
requirements set forth in this section. [L 1974, c 18, pt of §1; am L 1978, c
242, §4; gen ch 1985; am L 1996, c 181, §8; am L 2002, c 130, §112; am L 2008,
c 19, §47]