CHAPTER 2.5. FRANCHISES
IC 23-2-2.5
Chapter 2.5. Franchises
IC 23-2-2.5-1
Definitions
Sec. 1. As used in this chapter:
(a) "Franchise" means a contract by which:
(1) a franchisee is granted the right to engage in the business ofdispensing goods or services, under a marketing plan or systemprescribed in substantial part by a franchisor;
(2) the operation of the franchisee's business pursuant to sucha plan is substantially associated with the franchisor'strademark, service mark, trade name, logotype, advertising, orother commercial symbol designating the franchisor or itsaffiliate; and
(3) the person granted the right to engage in this business isrequired to pay a franchise fee.
"Franchise" includes a contract whereby the franchisee is grantedthe right to sell franchises on behalf of the franchisor. The term asdefined in subdivisions (1), (2), and (3) does not include a contractwhere the franchisee, or any of its officers or directors at the time thecontract is signed, has been in the type of business represented by thefranchise or a similar business for at least two (2) years, and theparties to the contract anticipated, or should have anticipated, at thetime the contract was entered into that the franchisee's gross salesderived from the franchised business during the first year ofoperations would not exceed twenty percent (20%) of the gross salesof all the franchisee's business operations.
(b) "Franchisee" means a person to whom a franchise is granted.
(c) "Franchisor" means a person who grants a franchise.
(d) "Sale" or "sell" includes every contract or agreement of saleof, contract to sell, or disposition of, a franchise or interest in afranchise for value.
(e) "State" includes a territory or possession of the United States,the District of Columbia, and Puerto Rico.
(f) "Fraud" and "deceit" includes any misrepresentation in anymanner of a material fact, any promise or representation or predictionas to the future not made honestly or in good faith, or the failure oromission to state a material fact necessary to make the statementsmade, in the light of the circumstances under which they were made,not misleading.
(g) "Offer" or "offer to sell" does not include the renewal orextension of an existing franchise where there is no interruption inthe operation of the franchised business by the franchisee.
(h) "Publish" means to issue or circulate by newspaper, mail,radio, or television, or otherwise disseminate to the public.
(i) "Franchise fee" means any fee that a franchisee is required topay directly or indirectly for the right to conduct a business to sell,resell, or distribute goods, services, or franchises under a contractagreement, including, but not limited to, any such payment for goods
or services. "Franchise fee" does not include:
(1) the payment of a reasonable service charge to the issuer ofa credit card by an establishment accepting or honoring thecredit card;
(2) amounts paid to a trading stamp company by a personissuing trading stamps in connection with the retail sale ofgoods or services; or
(3) the purchase or agreement to purchase goods at a bona fidewholesale price.
(j) "Disclosure statement" means the document provided for insection 13 of this chapter and all amendments to such document.
(k) "Write" or "written" includes printed, lithographed, orproduced by any other means of graphic communication.
(l) "Advertisement" means any published communication whichoffers any franchise for sale.
(m) "Affiliate" means any person who, directly or indirectlythrough one (1) or more intermediaries, controls, is controlled by, oris under common control with, the person to whom affiliation isattributed.
(n) "Commissioner" means the Indiana securities commissionerunder IC 23-19-6-1(a).
(o) "Service station franchisee" means a person who is granted byan oil company, refiner, jobber, or other franchisor a supplyfranchise agreement or a lease franchise agreement, or both, to sellgasoline at retail by a metered pump in Indiana.
(p) "Designated family member" means any person named in afranchise agreement by a service station franchisee as the personentitled to fulfill the terms of the agreement on behalf of thefranchisee if the franchisee dies before the term of the franchise hasended. Only the following are eligible to be named as designatedfamily members:
(1) The spouse of the franchisee.
(2) A natural or adopted child of the franchisee.
(3) A stepchild of the franchisee.
(4) The guardian of the franchisee's child or stepchild.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.241-1983, SEC.1; P.L.206-1993, SEC.1; P.L.27-2007, SEC.10.
IC 23-2-2.5-2
Application of chapter
Sec. 2. This chapter applies to an offer or franchise if:
(a) the offeree or franchisee is an Indiana resident; or
(b) the franchised business contemplated by the offer or franchisewill be or is operated in Indiana.
An offer to sell is not made in this state because the franchisorcirculates or there is circulated on his behalf in Indiana anadvertisement in: (1) a bona fide newspaper or other publication ofgeneral, regular and paid circulation which has had more thantwo-thirds (2/3) of its circulation outside this state during the pasttwelve (12) months; or (2) a radio or television program originating
outside this state which is received in Indiana.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-3
Exempt franchisors
Sec. 3. Sections 9 through 25 of this chapter do not apply to theoffer or sale of a franchise if the franchisor either sells no more thanone (1) franchise in any twenty-four (24) month period or thefranchisor:
(a) has a net worth:
(1) on a consolidated basis according to current financialstatements certified by independent certified publicaccountants, of not less than five million dollars($5,000,000); or
(2) according to current financial statements certified byindependent certified public accountants of not less than onemillion dollars ($1,000,000) and is at least eighty percent(80%) owned by a corporation which has a net worth on aconsolidated basis, according to current financial statementscertified by independent certified public accountants, of notless than five million dollars ($5,000,000);
(b) has:
(1) had at least twenty-five (25) franchisees conductingbusiness at all times during the five (5) year periodimmediately preceding the offer or sale; or
(2) conducted the business which is the subject of thefranchise continuously for not less than five (5) yearspreceding 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) franchiseesconducting business at all times during the five (5) year periodimmediately preceding the offer or sale, or such corporation hasconducted the business which is the subject of the franchisecontinuously for not less than five (5) years preceding the offeror sale; and
(c) discloses in writing to each prospective franchisee, at leastten (10) days prior to the execution by the prospectivefranchisee of a binding franchise or other agreement, or at leastten (10) days prior to the receipt of any consideration,whichever first occurs, the following information:
(1) The name of the franchisor, the name under which thefranchisor is doing or intends to do business, and the nameof any affiliate that will engage in business transactions withfranchisees.
(2) The franchisor's principal business address and the nameand address of its agent in Indiana authorized to receiveservice of process.
(3) The business form of the franchisor and the jurisdictionunder which it was organized.
(4) The business experience of the franchisor, including the
length of time the franchisor:
(i) has conducted a business of the type to be operated bythe franchisee;
(ii) has granted franchises for that business; and
(iii) has granted franchises in other lines of business.
(5) A copy of the franchise contract proposed for use or inuse in Indiana.
(6) A statement of the franchise fee charged, the proposedapplication of the proceeds of such fee by the franchisor, andthe formula by which the amount of the fee is determined ifthe fee is not the same in all cases.
(7) A statement describing any payments other thanfranchise fees that the franchisee is required to pay to thefranchisor or affiliated persons, including royalties orpayments which the franchisor or affiliated persons collectin whole or in part on behalf of a third party or parties.
(8) A statement of the conditions under which the franchisemay be terminated, renewal refused, or repurchased.
(9) A statement as to whether the franchisee is required topurchase from the franchisor or affiliates or their designeeservices, supplies, products, fixtures, or other goods relatingto the establishment or operation of the franchised business,together with a description thereof.
(10) A statement as to whether the franchisee is limited inthe goods or services offered by him to his customers.
(11) A statement of the terms and conditions of anyfinancing agreements.
(12) A statement of any past or present practice or of anyintent of the franchisor to transfer to a third party any note,contract, or other obligation of the franchisee in whole or inpart.
(13) If any financial statement concerning estimated profitsor earnings is used, the data upon which the estimate isbased.
(14) A statement as to whether the franchisee will receive anexclusive area or territory.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.233-1985, SEC.1.
IC 23-2-2.5-4
Exempt franchisees
Sec. 4. The offer of sale of a franchise by a franchisee who is notan affiliate of the franchisor for his own account is exempt fromsection 9 if the offer or sale is not effected by or through afranchisor. A sale is not effected by or through a franchisor if afranchisor is entitled to approve or disapprove a different franchisee.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-5
Sales exempted by commissioner Sec. 5. Section 9 does not apply to an offer or sale which thecommissioner, by rule or order, exempts as not being comprehendedwithin the purposes of this law and the registration of which he findsis not necessary or appropriate in the public interest or for theprotection of investors.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-6
Denial or revocation of exemptions; grounds
Sec. 6. The commissioner may, without a hearing, issue a stoporder denying or revoking any exemption specified in sections 3, 4,or 5 with respect to an offer or sale if he finds that it is in the publicinterest and either:
(a) that there has been a failure to comply with any of theprovisions of this chapter; or
(b) that the offer or sale would constitute misrepresentation to, ordeceit or fraud on, the purchaser or offeree.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-7
Notice of denial or revocation of exemptions; hearing
Sec. 7. (a) Upon the entry of a stop order under section 6 of thischapter, the commissioner shall notify the franchisor:
(1) of the entry of the stop order;
(2) of the reasons for the stop order; and
(3) that, upon receipt of a written request, the matter will be setdown for hearing to commence within fifteen (15) days afterreceipt of such request, unless the franchisor consents to a laterdate.
(b) If no hearing is requested or none is ordered by thecommissioner, the stop order is effective until it is modified orvacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, afternotice and hearing, may modify or vacate the stop order.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.1.
IC 23-2-2.5-8
Determination of exemption; request; fee; notice; hearing; order
Sec. 8. The commissioner may determine whether any proposedoffer or sale is entitled to an exemption. However, the commissionermay decline to exercise that authority as to any such offer or sale.Any interested party desiring the commissioner to exercise thatauthority shall submit to the commissioner a verified statement of allmaterial facts relating to the proposed offer or sale, which verifiedstatement shall be accompanied by a request for a ruling as to theparticular exemption claimed, together with a filing fee of fiftydollars ($50.00). After such notice to interested parties as thecommissioner deems proper and after a hearing, if any, thecommissioner may enter an order finding the proposed offer or sale
entitled or not entitled to the exemption claimed. Any order soentered, unless an appeal be taken therefrom in the mannerprescribed in this chapter is binding upon the commissioner and uponall interested parties if the proposed offer or sale of a franchise whenconsummated or issued conforms in every relevant and materialparticular with the facts set forth in the verified statement submitted.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-9
Offer or sale of franchise; requisites; disclosure statement
Sec. 9. No person may offer or sell any franchise:
(1) unless the franchise is registered under this chapter or isexempt from such registration under sections 3 through 5 of thischapter; and
(2) without first providing to the prospective franchisee at leastten (10) days prior to the execution by the prospectivefranchisee of a binding franchise or at least ten (10) days priorto the receipt by the franchisor of any consideration, whicheverfirst occurs, a disclosure statement together with a copy of allproposed contracts relating to the sale of a franchise.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.233-1985, SEC.2.
IC 23-2-2.5-10
Repealed
(Repealed by P.L.168-2001, SEC.16.)
IC 23-2-2.5-10.5
Registration of franchise; notification form
Sec. 10.5. (a) A person who wants to offer for sale a franchise inIndiana and who is not exempt under sections 3 through 5 of thischapter shall register the franchise by notification to thecommissioner on a notification form prescribed by the commissioner.The notification shall include the following:
(1) The name of the franchisor.
(2) The name or names under which the franchisor intends to dobusiness.
(3) The franchisor's principal business address.
(b) The following items shall be filed with the notification:
(1) One (1) copy of the disclosure statement required undersection 13 of this chapter.
(2) The consent to service of process required under section 24of this chapter, unless consent has previously been filed by theperson.
(3) The registration fee required under section 43 of thischapter.
(c) A franchisor may register only one (1) franchise for eachnotification.
(d) The registration of a franchise under this section is effectiveupon the commissioner's receipt of the notification. The notification
is effective for one (1) year from the date of the commissioner'sreceipt of the notification.
(e) During the one (1) year registration period, a person is notrequired to file with the commissioner any supplemental information,including any amendments to the disclosure statement, unless thecommissioner, acting under the commissioner's authority to suspendor revoke a registration under section 14 of this chapter, requests theinformation.
As added by P.L.168-2001, SEC.2.
IC 23-2-2.5-11
Signatures and verifications
Sec. 11. Registration notification forms, registration renewalforms, and amendments thereto, shall be signed and verified by thefranchisor.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.3.
IC 23-2-2.5-12
Escrow or impoundment of franchise fees; inadequate funding
Sec. 12. If the commissioner finds that:
(1) the franchisor has failed to demonstrate that adequatefinancial arrangements have been made to fulfill obligations toprovide real estate, improvements, equipment, inventory,training, or other items included in the offering; and
(2) the escrow or impoundment of franchise fees is necessaryand appropriate to protect prospective franchisees;
the commissioner may by order require the escrow or impoundmentof franchise fees and other funds paid by the franchisee until no laterthan the time of opening of the business of the franchisee.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.4.
IC 23-2-2.5-13
Disclosure statements
Sec. 13. A registration notification form filed under section 10.5of this chapter shall be accompanied by the fee prescribed in section43 of this chapter and by one (1) copy of a disclosure statement. Thedisclosure statement shall be in a form prescribed by thecommissioner or in a form permitted under 16 CFR 436, as amended.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.5.
IC 23-2-2.5-14
Stop orders; descriptions of charges
Sec. 14. (a) The commissioner may, without a hearing, issue astop order denying the effectiveness of or suspending or revoking theeffectiveness of a registration if the commissioner finds that theissuance of the order is in the public interest and also finds that:
(1) there has been a failure to comply with this chapter or the
rules or orders of the commissioner pertaining to this chapter;
(2) the offer or sale of the franchise would constitutemisrepresentation to, or deceit or fraud on, the purchasers orofferees;
(3) the franchisor has failed to comply with any rulepromulgated or order issued pursuant to section 12 of thischapter; or
(4) the franchisor, or the franchisor's predecessor, or any of thefranchisor's directors, trustees, general partners, chiefexecutives, financial officers, accounting officers, franchisesales officers, or other principal officers, or, if the franchisor isa limited liability company, any member or manager of thefranchisor:
(A) during the ten (10) year period immediately precedingthe date of registration, has:
(i) been convicted of a felony;
(ii) pleaded nolo contendere to a felony charge; or
(iii) been held liable in a civil action by final judgment;
if the felony or civil action involved fraud, embezzlement,misappropriation of property, or the violation of any state orfederal statute involving the offer or sale of securities orfranchises;
(B) is subject to any currently effective order affecting thefranchise resulting from a proceeding or pending actionbrought by any individual or public agency or department;
(C) is a defendant in any pending criminal or material civilproceeding;
(D) during the ten (10) year period immediately precedingthe date of registration, has been the defendant against whoma final judgment was entered in any material civil action; or
(E) is the franchisor or a principal executive officer orgeneral partner of the franchisor and has, during the ten (10)year period immediately preceding the date of registration,reorganized due to insolvency or been adjudicated as abankrupt.
(b) An order issued under this section based on a finding by thecommissioner under subsection (a)(4)(A) must include a descriptionof the charge, violation, or judgment referred to in subsection(a)(4)(A). An order issued under this section based on a finding bythe commissioner under subsection (a)(4)(B) must include a copy ofthe order referred to in subsection (a)(4)(B). An order issued underthis section based on a finding by the commissioner under subsection(a)(4)(D) must include a description of the judgment referred to insubsection (a)(4)(D). An order issued under this section based on afinding by the commissioner under subsection (a)(4)(E) must includea description of the insolvency or adjudication referred to insubsection (a)(4)(E).
(c) Before issuing a stop order under subsection (a)(4), such anorder must be based on a finding by the commissioner thatinvolvement of a person referred to in subsection (a)(4) creates an
unreasonable risk to prospective franchisees.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.6; P.L.30-2002, SEC.1; P.L.1-2003, SEC.73.
IC 23-2-2.5-15
Notice of stop order
Sec. 15. (a) Upon the entry of a stop order under section 14 of thischapter, the commissioner shall notify the franchisor:
(1) of the entry of the stop order;
(2) of the reasons for the stop order; and
(3) that, upon receipt of a written request, the matter will be setdown for hearing to commence within fifteen (15) days afterreceipt of such request, unless the franchisor consents to a laterdate.
(b) If no hearing is requested or none is ordered by thecommissioner, the stop order is effective until it is modified orvacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, afternotice and hearing, may modify or vacate the stop order.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.7.
IC 23-2-2.5-16
Stop orders; vacating or modifying
Sec. 16. The commissioner may vacate or modify a stop order ifhe finds that the conditions which caused its entry have changed orthat it is otherwise in the public interest to do so.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-17
Effectiveness of registration
Sec. 17. If no stop order under section 14 of this chapter is ineffect, registration by notification takes effect upon thecommissioner's receipt of the notification form. A registration bynotification is effective for a period of one (1) year.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.8.
IC 23-2-2.5-18
Renewal of registration; period
Sec. 18. A registration by notification may be renewed bysubmitting to the commissioner a registration renewal form not laterthan the date the registration is due to expire. If no stop order orother order under section 14 of this chapter is in effect, registrationof the offer is renewed at the time the registration would haveexpired. A renewal is effective for a period of one (1) year unless thecommissioner specified a shorter period.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.9; P.L.48-2006, SEC.6.
IC 23-2-2.5-19
Renewal forms
Sec. 19. A registration renewal form shall be in the form andcontain the content prescribed by the commissioner and shall beaccompanied by one (1) copy of the proposed disclosure statement.Each such registration renewal form shall be accompanied by the feeprescribed in section 43 of this chapter.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.10.
IC 23-2-2.5-20
Repealed
(Repealed by P.L.30-2002, SEC.3.)
IC 23-2-2.5-21
Records of sales
Sec. 21. Every franchisor offering franchises for sale shallmaintain a complete set of books, records, and accounts of thosesales.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-22
Experts
Sec. 22. The commissioner may accept and act upon the opinions,appraisals, or reports of any experts which may be presented by afranchisor or any interested party, on any question of fact concerningthe franchises proposed to be offered or sold. The commissioner mayalso have any or all matters concerning those franchises investigated,appraised, passed upon or certified to the commissioner by anyexperts selected by the commissioner, at the expense of thefranchisor.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.11.
IC 23-2-2.5-23
Registration or filing not considered finding upon merits
Sec. 23. (a) Neither:
(1) the fact that a registration renewal form has been filed or aregistration notification form has been submitted to thecommissioner under section 10.5 of this chapter; nor
(2) the fact that such registration has become effective;
constitutes a finding by the commissioner that any document filedunder this chapter is true, complete, or not misleading. Neither anysuch fact nor the fact that an exemption is available for a transactionmeans that the commissioner has passed in any way upon the meritsor qualifications of, or recommended or given approval to, anyperson, franchise or transaction.
(b) A person may not make or cause to be made to anyprospective purchaser or offeree any representation inconsistent withsubsection (a).(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.12.
IC 23-2-2.5-24
Consent to service of process on secretary of state
Sec. 24. Before a person may offer to sell franchises under thischapter, the person shall file with the commissioner, in the form thatthe commissioner by rule or order prescribes, an irrevocable consentappointing the secretary of state or any successor secretary of stateto be the person's attorney to receive service of any lawful process inany noncriminal suit, action, or proceeding against the person or theperson's successor, executor, or administrator that arises under thischapter or any rule or order under this chapter after the consent hasbeen filed with the same force as if served personally on the personfiling the consent. A person who has filed a consent with thecommissioner for a previous registration or exemption under thischapter is not required to file another consent. The person's previousconsent shall remain effective for all subsequent registrations orexemptions filed by the person under this chapter. Service shall bemade in accordance with the Indiana Rules of Civil Procedure.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by P.L.1-1991,SEC.159; P.L.168-2001, SEC.13.
IC 23-2-2.5-25
Repealed
(Repealed by P.L.30-2002, SEC.3.)
IC 23-2-2.5-26
Advertisements containing false statements; notification; hearing
Sec. 26. No person shall publish or cause to be published anyadvertisement concerning any franchise in Indiana after thecommissioner finds that the advertisement contains any statementthat is false, is misleading or omits to make any statement necessaryin order to make the statements made, in light of the circumstancesunder which they were made, not misleading and so notifies theperson in writing. Such notification may be given without notice ofhearing. At any time after the issuance of a notification under thissection, the person desiring to use the advertisement may request inwriting that the order be rescinded. Upon the receipt of such writtenrequest, the matter shall be set down for hearing to commence withinfifteen (15) days after receipt of the request unless the person makingthat request consents to a later date.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-27
Fraud or deceit unlawful
Sec. 27. It is unlawful for any person in connection with the offer,sale or purchase of any franchise, or in any filing made with thecommissioner, directly or indirectly: (1) to employ any device,scheme or artifice to defraud; (2) to make any untrue statements of
a material fact or to omit to state a material fact necessary in order tomake the statements made, in the light of circumstances under whichthey are made, not misleading; or (3) to engage in any act whichoperates or would operate as a fraud or deceit upon any person.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-28
Violations; judgment; damages; interest; attorney's fees
Sec. 28. A person who recovers judgment for a violation of thischapter may recover, as part of that judgment: (1) any consequentialdamages; (2) interest at eight percent (8%) on the judgment; and (3)reasonable attorney's fees; unless the defendant proves that theplaintiff knew the facts concerning the violation, or that thedefendant exercised reasonable care and did not know, or, if he hadexercised reasonable care, would not have known, of the factsconcerning the violation.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-29
Aiders and abettors in violations; joint and several liability
Sec. 29. Every person who materially aids or abets in an act ortransaction constituting a violation of this chapter is also liablejointly and severally to the same extent as the person whom he aidedand abetted, unless the person who aided and abetted had noknowledge of or reasonable grounds to believe in the existence of thefacts by reason of which the liability is alleged to exist.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-30
Limitation of actions
Sec. 30. A person may not maintain an action to enforce anyliability created under this chapter unless brought before theexpiration of three (3) years after discovery by the plaintiff of thefacts constituting the violation.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-31
Survival of actions
Sec. 31. Every civil action under this chapter survives the deathof any person who might have been a plaintiff or defendant.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-32
Remedies
Sec. 32. Whenever it appears to the commissioner that any personhas engaged or is about to engage in any act or practice constitutinga violation of any provision of this chapter or any rule or orderhereunder, he may in his discretion bring an action in the appropriatecircuit or superior court to enjoin the acts or practices, to enforcecompliance with this chapter, or to obtain any other appropriate
remedy. Upon proper showing, a permanent or preliminaryinjunction, restraining order, declaratory judgment or otherappropriate remedy shall be granted and, in addition to andindependent of any other remedy granted herein, a receiver orconservator may be appointed for the defendant or the defendant'sassets. The court may not require the commissioner to post a bond.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-33
Investigations; proceedings; powers; self-incrimination
Sec. 33. (a) The commissioner may in his discretion make suchinvestigations as he deems necessary to determine whether anyperson has violated or is about to violate any provision of thischapter.
(b) For the purpose of any investigation or proceeding under thischapter, the commissioner or his representative may administer oathsand affirmations, subpoena witnesses, compel their attendance, takeevidence, and require the production of any books, papers,correspondence, memoranda, agreements, or other documents orrecords which the commissioner deems material to the inquiry.
(c) Upon order of the commissioner or his representative in anyhearing, depositions may be taken of any witness, to be taken in themanner prescribed by law for depositions in civil actions, and madereturnable to the commissioner or his representative.
(d) In case of failure by any person to obey a subpoena, the circuitor superior court, upon application by the commissioner, may issueto the person an order requiring him to appear before thecommissioner, or his representative, there to produce documentaryevidence, if so ordered, or to give evidence touching the matter underinvestigation.
(e) No person is excused from attending and testifying or fromproducing any document or record before the commissioner, or inobedience to the subpoena of the commissioner, or his representative,or in any proceeding instituted by the commissioner, on the groundsthat the testimony or evidence, documentary or otherwise, requiredof him may tend to incriminate him or subject him to a penalty orforfeiture; but no person may be prosecuted or subjected to anypenalty or forfeiture for or on account of any transaction, matter, orthing concerning which he is compelled, after validly claiming hisprivilege against self-incrimination, to testify or produce evidencedocumentary or otherwise.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-34
Violations; orders and notices; hearing; costs; civil penalties;enforcement action
Sec. 34. (a) If it appears to the commissioner that:
(1) the offer of any franchise is subject to registration under thischapter and it is being, or it has been, offered for sale withoutsuch offer first being registered; or (2) a person has engaged in or is about to engage in an act, apractice, or a course of business constituting a violation of thischapter or a rule or an order under this chapter;
the commissioner may investigate and may issue, with or without aprior hearing, orders and notices as the commissioner determines tobe in the public interest, including cease and desist orders, orders toshow cause, and notices. After notice and an opportunity for hearing,the commissioner may enter an order of rescission, restitution, ordisgorgement, including interest at the rate of eight percent (8%) peryear, directed to a person who has violated this chapter or a rule ororder under this chapter. In addition to all other remedies, thecommissioner may bring an action in the name of and on behalf ofthe state against any person participating in or about to participate ina violation of this chapter, to enjoin the person from continuing ordoing an act furthering a violation of this chapter and may obtain theappointment of a receiver or conservator. Upon a proper showing bythe commissioner, the court shall enter an order of the commissionerdirecting rescission, restitution, or disgorgement against a personwho has violated this chapter or a rule or order under this chapter.
(b) Upon the issuance of an order or a notice by the commissionerunder subsection (a), the commissioner shall promptly notify therespondent of the following:
(1) That the order or notice has been issued.
(2) The reasons the order or notice has been issued.
(3) That upon the receipt of a written request the matter will beset for a hearing to commence not later than forty-five (45)business days after the commissioner receives the request,unless the respondent consents to a later date.
If the respondent does not request a hearing and the commissionerdoes not order a hearing, the order or notice will remain in effectuntil it is modified or vacated by the commissioner. If a hearing isrequested or ordered, the commissioner, after giving notice of thehearing, may modify or vacate the order or extend it until finaldetermination.
(c) In a final order, the commissioner may charge the costs of aninvestigation or a proceeding conducted in connection with aviolation of:
(1) this chapter; or
(2) a rule or an order adopted or issued under this chapter;
to be paid as directed by the commissioner in the order.
(d) In a proceeding in a circuit or superior court under thissection, the commissioner is entitled to recover all costs andexpenses of investigation to which the commissioner would beentitled in an administrative proceeding, and the court shall includethe costs in its final judgment.
(e) If the commissioner determines, after notice and opportunityfor a hearing, that a person has violated this chapter, thecommissioner may, in addition to or instead of all other remedies,impose a civil penalty upon the person in an amount not to exceedten thousand dollars ($10,000) for each violation. An appeal from the
decision of the commissioner imposing a civil penalty under thissubsection may be taken by an aggrieved party under section 44 ofthis chapter.
(f) The commissioner may bring an action in the circuit orsuperior court of Marion County to enforce payment of any penaltyimposed under subsection (e).
(g) Penalties collected under this section shall be deposited in thesecurities division enforcement account established underIC 23-19-6-1(f).
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.230-2007, SEC.5; P.L.1-2009, SEC.129.
IC 23-2-2.5-35
Offer of franchise exempt from registration without compliancewith IC 23-2-2.5-3 and IC 23-2-2.5-27; cease and desist order;hearing
Sec. 35. If, in the opinion of the commissioner, the offer of anyfranchise exempt from registration under this chapter is being or hasbeen offered for sale without complying with sections 3 and 27, thecommissioner may order the franchisor or offeror of such franchiseto cease and desist from the further offer or sale of such franchiseunless and until such offer is made in compliance with this chapter.If, after such an order has been made, a request for a hearing is filedin writing by the person affected, a hearing shall be held tocommence within fifteen (15) days after the request is made, unlessthe person affected consents to a later date.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-36
Prosecution of violations
Sec. 36. The commissioner may refer such evidence as isavailable concerning any violation of this chapter to the prosecutingattorney of the county in which the violation occurred, who may,with or without such a reference, institute appropriate criminalproceedings under this chapter. If evidence concerning violations ofthis chapter is referred to a prosecuting attorney, he shall withinninety (90) days file with the commissioner a written statementconcerning any action taken or, if no action has been taken, thereasons therefor.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-37
Violations; felony
Sec. 37. A person who knowingly violates this chapter commitsa Class C felony.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by Acts 1978,P.L.2, SEC.2307.
IC 23-2-2.5-38
Conduct equivalent to appointment of secretary of state for service
of process
Sec. 38. When any person engages in conduct prohibited by thischapter, whether or not he has filed a consent to service of processunder section 24 and personal jurisdiction over him cannot otherwisebe obtained in this state, that conduct shall be considered equivalentto his appointment of the secretary of state or his successor in officeto be his attorney to receive service of any lawful process in any civilaction or proceeding against him or his successor or personalrepresentative which grows out of that conduct and which is broughtunder this chapter, with the same force and validity as if served onhim personally. Service shall be made in accordance with the IndianaRules of Civil Procedure.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-39
Exemption or classification; burden of proof
Sec. 39. The burden of proof of the entitlement to any exemptionor classification provided in this chapter, in any civil or criminalproceeding is on the party claiming the exemption or classification.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-40
Certificate of commissioner as evidence
Sec. 40. In any civil or criminal proceeding under this chapter acertificate duly signed by the commissioner showing compliance ornoncompliance with this chapter respecting the franchise in questionor respecting compliance or noncompliance with this chapter by anyperson constitutes prima facie evidence of such compliance or suchnoncompliance and is admissible in evidence in any such proceeding.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-41
Statements and documents filed with secretary of state as evidence
Sec. 41. Copies of any statements and documents filed in theoffice of the secretary of state and of any records of the secretary ofstate certified by the commissioner are admissible in any civil orcriminal proceeding under this chapter to the same effect as theoriginal of such statement, document or record would be if actuallyproduced.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-42
Administration of chapter
Sec. 42. This chapter shall be administered by the office of thesecretary of state of Indiana through the commissioner.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-43
Fees and funds; accounting; deposit; expenses
Sec. 43. (a) All fees and funds of whatever character accruing
from the administration of this chapter shall be:
(1) accounted for by the secretary of state;
(2) paid into the state treasury monthly; and
(3) placed in the same account of the state general fund asestablished by IC 23-19-6-1(f), from which all compensationand expenses shall be paid for the administration of thischapter.
(b) The fee for filing a form for registration by notification of thesale of franchises under section 10.5 of this chapter is five hundreddollars ($500).
(c) The fee for filing a registration renewal form under section 18of this chapter is two hundred fifty dollars ($250).
(d) When a registration notification form or registration renewalform is denied or withdrawn, the commissioner shall retain onehundred fifty dollars ($150) of the fee.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.233-1985, SEC.4; P.L.168-2001, SEC.14; P.L.30-2002, SEC.2;P.L.27-2007, SEC.11.
IC 23-2-2.5-44
Appeal
Sec. 44. An appeal may be taken by any person from any finalorder of the commissioner affecting such person in the same manneras prescribed in IC 23-19-6-9.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by P.L.27-2007,SEC.12.
IC 23-2-2.5-45
Assistance of attorney general; expenses
Sec. 45. In connection with the administration and enforcement ofthe provisions of this chapter, it is hereby made the duty of theattorney general of Indiana to render all necessary assistance to thecommissioner upon his request, and to that end the attorney generalshall employ such legal and such other professional services as shallbe necessary to adequately and fully perform such service under thedirection of the commissioner as the demands of the securitiesdivision shall require, and any expenses so incurred by the attorneygeneral for the purposes aforesaid shall be chargeable against andpaid out of the securities division fund and if such fund isinsufficient for the payment of such expenses and any expenses ofthe securities division incident to the administration of this chapter,then a sufficient sum of money for the payment of any suchdeficiency is hereby appropriated annually out of any moneyreceived by the secretary of state as fees for the incorporation and forthe filing of the annual reports of corporations.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-46
Liability for performance of official duties
Sec. 46. Neither the secretary of state nor the commissioner, nor
any employee of the securities division shall be liable in theirindividual capacity, except to the state of Indiana, for any act doneor omitted in connection with the performance of their respectiveduties under the provisions of this chapter.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-47
Construction and purpose of chapter
Sec. 47. All provisions of this chapter delegating and grantingpower to the secretary of state, the securities division and thecommissioner shall be liberally construed to the end that the practiceor commission of fraud may be prohibited and prevented, disclosureof sufficient and reliable information in order to afford reasonableopportunity for the exercise of independent judgment of the personsinvolved may be assured, in connection with the issuance, barter,sale, purchase, transfer or disposition of franchises in this state. It isthe intent and purpose of this chapter to delegate and grant to andvest in the secretary of state, the securities division and thecommissioner full and complete power to carry into effect andaccomplish the purpose of this chapter and to charge them with fulland complete responsibility for the effective administration thereof.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-48
Public records; inspection; disclosure or use of informationrestricted; copies; destruction
Sec. 48. (a) All registration notification forms, registrationrenewal forms, applications to amend registrations, reports, and otherpapers and documents filed with the commissioner under this chaptershall be open to public inspection. The commissioner may publishany information filed with or obtained by the commissioner. Noprovision of this chapter authorizes the commissioner or any of thecommissioner's assistants, clerks, or deputies to disclose anyinformation withheld from public inspection except amongthemselves or when necessary or appropriate in a proceeding orinvestigation under this chapter or to other federal or state regulatoryagencies. No provision of this chapter either creates or derogatesfrom any privilege which exists at common law or otherwise whendocumentary or other evidence is sought under a subpoena directedto the commissioner or any of the commissioner's assistants, clerks,or deputies.
(b) It is unlawful for the commissioner or any of thecommissioner's assistants, clerks, or deputies to use for personalbenefit any information which is filed with or obtained by thecommissioner and which is not then generally available to the public.
(c) Upon request, and at such reasonable charges as thecommissioner prescribes by rule, the commissioner shall furnish toany person photostatic or other copies (certified by the commissionerif certification is requested) of any document which is retained as amatter of public record, except that the commissioner shall not
charge or collect any fee for photostatic or other copies of anydocument furnished to public officers for use in their officialcapacity.
(d) The commissioner may destroy any registration notificationforms, together with the files and folders, as useless or obsolete, four(4) years after the date of registration; provided that a permanentrecord shall be maintained of any disciplinary action taken by thecommissioner and of all orders issued under this chapter.
(e) Copies on microfilm or in other form which may be retainedby the commissioner of any records destroyed under this sectionshall be accepted for all purposes as equivalent to the original whencertified by the commissioner.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended byP.L.168-2001, SEC.15.
IC 23-2-2.5-49
Construction with other laws
Sec. 49. Nothing in this chapter shall be construed to relievecorporations or other business organizations from making reportsnow or hereafter required by law to be made to the secretary of state,or any other state officer, or paying the fees now or hereafter to bepaid by corporations or other business organizations. This chaptershall not be construed to repeal any law now in force regulating theorganization of corporations or other business organizations inIndiana, or the admission of any foreign corporation but theprovisions of this chapter shall be construed to be additional to anyprovisions regulating the organization of a corporation or otherbusiness organization under the laws of Indiana, or the admission ofa foreign corporation to do business in Indiana.
(Formerly: Acts 1975, P.L.262, SEC.1.)
IC 23-2-2.5-50
Administrative orders and procedures
Sec. 50. IC 4-21.5 does not apply to proceedings under thischapter.
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by P.L.7-1987,SEC.103.
IC 23-2-2.5-51
Service stations; succession to ownership by family member ofdeceased franchisee
Sec. 51. (a) Any designated family member of a deceased servicestation franchisee may succeed to the ownership of the existingagreement if all of the following conditions are met:
(1) The designated family member gives the service stationfranchisor written notice of the intention to succeed to theservice station agreement within thirty (30) days of the servicestation franchisee's death.
(2) The designated family member agrees to be bound by allterms and conditions of the existing owner's franchise
agreement.
(3) There is no good cause for the service station franchisor torefuse to honor the succession.
For purposes of this subsection, the grounds for termination ornonrenewal of a franchise set out in the federal Petroleum MarketingPractices Act (15 U.S.C. 2801 et seq.) constitute good cause.Notification of the refusal must be submitted to the designated familymember in writing within sixty (60) days after the date of the servicestation franchisee's death, and must specify the reasons for therefusal. The form of the written notice required under this subsectionshall be prescribed in the terms of the agreement.
(b) This section does not apply to agreements between franchisorsand service station franchisees entered into or renewed before July1, 1983.
As added by P.L.241-1983, SEC.2.