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 of
dispensing goods or services, under a marketing plan or system
prescribed in substantial part by a franchisor;
(2) the operation of the franchisee's business pursuant to such
a plan is substantially associated with the franchisor's
trademark, service mark, trade name, logotype, advertising, or
other commercial symbol designating the franchisor or its
affiliate; and
(3) the person granted the right to engage in this business is
required to pay a franchise fee.
"Franchise" includes a contract whereby the franchisee is granted
the right to sell franchises on behalf of the franchisor. The term as
defined in subdivisions (1), (2), and (3) does not include a contract
where the franchisee, or any of its officers or directors at the time the
contract is signed, has been in the type of business represented by the
franchise or a similar business for at least two (2) years, and the
parties to the contract anticipated, or should have anticipated, at the
time the contract was entered into that the franchisee's gross sales
derived from the franchised business during the first year of
operations would not exceed twenty percent (20%) of the gross sales
of 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 sale
of, contract to sell, or disposition of, a franchise or interest in a
franchise 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 any
manner of a material fact, any promise or representation or prediction
as to the future not made honestly or in good faith, or the failure or
omission to state a material fact necessary to make the statements
made, in the light of the circumstances under which they were made,
not misleading.
(g) "Offer" or "offer to sell" does not include the renewal or
extension of an existing franchise where there is no interruption in
the 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 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. "Franchise fee" does not include:
(1) the payment of a reasonable service charge to the issuer of
a credit card by an establishment accepting or honoring the
credit card;
(2) amounts paid to a trading stamp company by a person
issuing trading stamps in connection with the retail sale of
goods or services; or
(3) the purchase or agreement to purchase goods at a bona fide
wholesale price.
(j) "Disclosure statement" means the document provided for in
section 13 of this chapter and all amendments to such document.
(k) "Write" or "written" includes printed, lithographed, or
produced by any other means of graphic communication.
(l) "Advertisement" means any published communication which
offers any franchise for sale.
(m) "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.
(n) "Commissioner" means the Indiana securities commissioner
under IC 23-19-6-1(a).
(o) "Service station franchisee" means a person who is granted by
an oil company, refiner, jobber, or other franchisor a supply
franchise agreement or a lease franchise agreement, or both, to sell
gasoline at retail by a metered pump in Indiana.
(p) "Designated family member" means any person named in a
franchise agreement by a service station franchisee as the person
entitled to fulfill the terms of the agreement on behalf of the
franchisee if the franchisee dies before the term of the franchise has
ended. Only the following are eligible to be named as designated
family 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 by
P.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 franchise
will be or is operated in Indiana.
An offer to sell is not made in this state because the franchisor
circulates or there is circulated on his behalf in Indiana an
advertisement in: (1) a bona fide newspaper or other publication of
general, regular and paid circulation which has had more than
two-thirds (2/3) of its circulation outside this state during the past
twelve (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 the
offer or sale of a franchise if the franchisor either sells no more than
one (1) franchise in any twenty-four (24) month period or the
franchisor:
(a) has a net worth:
(1) 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
(2) 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);
(b) has:
(1) 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
(2) 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
(c) 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:
(1) 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.
(2) The franchisor's principal business address and the name
and address of its agent in Indiana authorized to receive
service of process.
(3) The business form of the franchisor and the jurisdiction
under 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 by
the 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 in
use in Indiana.
(6) 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.
(7) 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.
(8) A statement of the conditions under which the franchise
may be terminated, renewal refused, or repurchased.
(9) 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.
(10) A statement as to whether the franchisee is limited in
the goods or services offered by him to his customers.
(11) A statement of the terms and conditions of any
financing agreements.
(12) 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.
(13) If any financial statement concerning estimated profits
or earnings is used, the data upon which the estimate is
based.
(14) 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.
IC 23-2-2.5-4 Exempt franchisees
Sec. 4. The offer of sale of a franchise by a franchisee who is not
an affiliate of the franchisor for his own account is exempt from
section 9 if the offer or sale is not effected by or through a
franchisor. A sale is not effected by or through a franchisor if a
franchisor 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 the
commissioner, by rule or order, exempts as not being comprehended
within the purposes of this law and the registration of which he finds
is not necessary or appropriate in the public interest or for the
protection 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 stop
order 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 public
interest and either:
(a) that there has been a failure to comply with any of the
provisions of this chapter; or
(b) that the offer or sale would constitute misrepresentation to, or
deceit 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 this
chapter, 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 set
down for hearing to commence within fifteen (15) days after
receipt of such request, unless the franchisor consents to a later
date.
(b) If no hearing is requested or none is ordered by the
commissioner, the stop order is effective until it is modified or
vacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, after
notice and hearing, may modify or vacate the stop order. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 proposed
offer or sale is entitled to an exemption. However, the commissioner
may decline to exercise that authority as to any such offer or sale.
Any interested party desiring the commissioner to exercise that
authority shall submit to the commissioner a verified statement of all
material facts relating to the proposed offer or sale, which verified
statement shall be accompanied by a request for a ruling as to the
particular exemption claimed, together with a filing fee of fifty
dollars ($50.00). After such notice to interested parties as the
commissioner deems proper and after a hearing, if any, the
commissioner may enter an order finding the proposed offer or sale
entitled or not entitled to the exemption claimed. Any order so
entered, unless an appeal be taken therefrom in the manner
prescribed in this chapter is binding upon the commissioner and upon
all interested parties if the proposed offer or sale of a franchise when
consummated or issued conforms in every relevant and material
particular 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 is
exempt from such registration under sections 3 through 5 of this
chapter; and
(2) without first providing to the prospective franchisee at least
ten (10) days prior to the execution by the prospective
franchisee of a binding franchise or at least ten (10) days prior
to the receipt by the franchisor of any consideration, whichever
first occurs, a disclosure statement together with a copy of all
proposed contracts relating to the sale of a franchise. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 in
Indiana and who is not exempt under sections 3 through 5 of this
chapter shall register the franchise by notification to the
commissioner 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 do
business.
(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 under
section 13 of this chapter.
(2) The consent to service of process required under section 24
of this chapter, unless consent has previously been filed by the
person.
(3) The registration fee required under section 43 of this
chapter.
(c) A franchisor may register only one (1) franchise for each
notification.
(d) The registration of a franchise under this section is effective
upon the commissioner's receipt of the notification. The notification
is effective for one (1) year from the date of the commissioner's
receipt of the notification.
(e) During the one (1) year registration period, a person is not
required to file with the commissioner any supplemental information,
including any amendments to the disclosure statement, unless the
commissioner, acting under the commissioner's authority to suspend
or revoke a registration under section 14 of this chapter, requests the
information. As added by P.L.168-2001, SEC.2.
IC 23-2-2.5-11 Signatures and verifications
Sec. 11. Registration notification forms, registration renewal
forms, and amendments thereto, shall be signed and verified by the
franchisor. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 adequate
financial arrangements have been made to fulfill obligations to
provide real estate, improvements, equipment, inventory,
training, or other items included in the offering; and
(2) the escrow or impoundment of franchise fees is necessary
and appropriate to protect prospective franchisees;
the commissioner may by order require the escrow or impoundment
of franchise fees and other funds paid by the franchisee until no later
than the time of opening of the business of the franchisee. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.168-2001, SEC.4.
IC 23-2-2.5-13 Disclosure statements
Sec. 13. A registration notification form filed under section 10.5
of this chapter shall be accompanied by the fee prescribed in section
43 of this chapter and by one (1) copy of a disclosure statement. The
disclosure statement shall be in a form prescribed by the
commissioner or in a form permitted under 16 CFR 436, as amended. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 a
stop order denying the effectiveness of or suspending or revoking the
effectiveness of a registration if the commissioner finds that the
issuance 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 constitute
misrepresentation to, or deceit or fraud on, the purchasers or
offerees;
(3) the franchisor has failed to comply with any rule
promulgated or order issued pursuant to section 12 of this
chapter; or
(4) the franchisor, or the franchisor's predecessor, or any of the
franchisor's directors, trustees, general partners, chief
executives, financial officers, accounting officers, franchise
sales officers, or other principal officers, or, if the franchisor is
a limited liability company, any member or manager of the
franchisor:
(A) during the ten (10) year period immediately preceding
the 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 or
federal statute involving the offer or sale of securities or
franchises;
(B) is subject to any currently effective order affecting the
franchise resulting from a proceeding or pending action
brought by any individual or public agency or department;
(C) is a defendant in any pending criminal or material civil
proceeding;
(D) during the ten (10) year period immediately preceding
the date of registration, has been the defendant against whom
a final judgment was entered in any material civil action; or
(E) is the franchisor or a principal executive officer or
general 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 a
bankrupt.
(b) An order issued under this section based on a finding by the
commissioner under subsection (a)(4)(A) must include a description
of the charge, violation, or judgment referred to in subsection
(a)(4)(A). An order issued under this section based on a finding by
the commissioner under subsection (a)(4)(B) must include a copy of
the order referred to in subsection (a)(4)(B). An order issued under
this section based on a finding by the commissioner under subsection
(a)(4)(D) must include a description of the judgment referred to in
subsection (a)(4)(D). An order issued under this section based on a
finding by the commissioner under subsection (a)(4)(E) must include
a description of the insolvency or adjudication referred to in
subsection (a)(4)(E).
(c) Before issuing a stop order under subsection (a)(4), such an
order must be based on a finding by the commissioner that
involvement 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 by
P.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 this
chapter, 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 set
down for hearing to commence within fifteen (15) days after
receipt of such request, unless the franchisor consents to a later
date.
(b) If no hearing is requested or none is ordered by the
commissioner, the stop order is effective until it is modified or
vacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, after
notice and hearing, may modify or vacate the stop order. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 if
he finds that the conditions which caused its entry have changed or
that 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 in
effect, registration by notification takes effect upon the
commissioner's receipt of the notification form. A registration by
notification is effective for a period of one (1) year. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.168-2001, SEC.8.
IC 23-2-2.5-18 Renewal of registration; period
Sec. 18. A registration by notification may be renewed by
submitting to the commissioner a registration renewal form not later
than the date the registration is due to expire. If no stop order or
other order under section 14 of this chapter is in effect, registration
of the offer is renewed at the time the registration would have
expired. A renewal is effective for a period of one (1) year unless the
commissioner specified a shorter period. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 and
contain the content prescribed by the commissioner and shall be
accompanied by one (1) copy of the proposed disclosure statement.
Each such registration renewal form shall be accompanied by the fee
prescribed in section 43 of this chapter. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 shall
maintain a complete set of books, records, and accounts of those
sales. (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 a
franchisor or any interested party, on any question of fact concerning
the franchises proposed to be offered or sold. The commissioner may
also have any or all matters concerning those franchises investigated,
appraised, passed upon or certified to the commissioner by any
experts selected by the commissioner, at the expense of the
franchisor. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 a
registration notification form has been submitted to the
commissioner 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 filed
under this chapter is true, complete, or not misleading. Neither any
such fact nor the fact that an exemption is available for a transaction
means that the commissioner has passed in any way upon the merits
or qualifications of, or recommended or given approval to, any
person, franchise or transaction.
(b) A person may not make or cause to be made to any
prospective purchaser or offeree any representation inconsistent with
subsection (a).
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 this
chapter, the person shall file with the commissioner, in the form that
the commissioner by rule or order prescribes, an irrevocable consent
appointing the secretary of state or any successor secretary of state
to be the person's attorney to receive service of any lawful process in
any noncriminal suit, action, or proceeding against the person or the
person's successor, executor, or administrator that arises under this
chapter or any rule or order under this chapter after the consent has
been filed with the same force as if served personally on the person
filing the consent. A person who has filed a consent with the
commissioner for a previous registration or exemption under this
chapter is not required to file another consent. The person's previous
consent shall remain effective for all subsequent registrations or
exemptions filed by the person under this chapter. Service shall be
made 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 any
advertisement concerning any franchise in Indiana after the
commissioner finds that the advertisement contains any statement
that is false, is misleading or omits to make any statement necessary
in order to make the statements made, in light of the circumstances
under which they were made, not misleading and so notifies the
person in writing. Such notification may be given without notice of
hearing. At any time after the issuance of a notification under this
section, the person desiring to use the advertisement may request in
writing that the order be rescinded. Upon the receipt of such written
request, the matter shall be set down for hearing to commence within
fifteen (15) days after receipt of the request unless the person making
that 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 the
commissioner, 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 to
make the statements made, in the light of circumstances under which
they are made, not misleading; or (3) to engage in any act which
operates 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 this
chapter may recover, as part of that judgment: (1) any consequential
damages; (2) interest at eight percent (8%) on the judgment; and (3)
reasonable attorney's fees; unless the defendant proves that the
plaintiff knew the facts concerning the violation, or that the
defendant exercised reasonable care and did not know, or, if he had
exercised reasonable care, would not have known, of the facts
concerning 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 or
transaction constituting a violation of this chapter is also liable
jointly and severally to the same extent as the person whom he aided
and abetted, unless the person who aided and abetted had no
knowledge of or reasonable grounds to believe in the existence of the
facts 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 any
liability created under this chapter unless brought before the
expiration of three (3) years after discovery by the plaintiff of the
facts 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 death
of 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 person
has engaged or is about to engage in any act or practice constituting
a violation of any provision of this chapter or any rule or order
hereunder, he may in his discretion bring an action in the appropriate
circuit or superior court to enjoin the acts or practices, to enforce
compliance with this chapter, or to obtain any other appropriate
remedy. Upon proper showing, a permanent or preliminary
injunction, restraining order, declaratory judgment or other
appropriate remedy shall be granted and, in addition to and
independent of any other remedy granted herein, a receiver or
conservator may be appointed for the defendant or the defendant's
assets. 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 such
investigations as he deems necessary to determine whether any
person has violated or is about to violate any provision of this
chapter.
(b) For the purpose of any investigation or proceeding under this
chapter, the commissioner or his representative may administer oaths
and affirmations, subpoena witnesses, compel their attendance, take
evidence, and require the production of any books, papers,
correspondence, memoranda, agreements, or other documents or
records which the commissioner deems material to the inquiry.
(c) Upon order of the commissioner or his representative in any
hearing, depositions may be taken of any witness, to be taken in the
manner prescribed by law for depositions in civil actions, and made
returnable to the commissioner or his representative.
(d) In case of failure by any person to obey a subpoena, the circuit
or superior court, upon application by the commissioner, may issue
to the person an order requiring him to appear before the
commissioner, or his representative, there to produce documentary
evidence, if so ordered, or to give evidence touching the matter under
investigation.
(e) No person is excused from attending and testifying or from
producing any document or record before the commissioner, or in
obedience to the subpoena of the commissioner, or his representative,
or in any proceeding instituted by the commissioner, on the grounds
that the testimony or evidence, documentary or otherwise, required
of him may tend to incriminate him or subject him to a penalty or
forfeiture; but no person may be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter, or
thing concerning which he is compelled, after validly claiming his
privilege against self-incrimination, to testify or produce evidence
documentary 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 this
chapter and it is being, or it has been, offered for sale without
such offer first being registered; or
(2) a person has engaged in or is about to engage in an act, a
practice, or a course of business constituting a violation of this
chapter or a rule or an order under this chapter;
the commissioner may investigate and may issue, with or without a
prior hearing, orders and notices as the commissioner determines to
be in the public interest, including cease and desist orders, orders to
show cause, and notices. After notice and an opportunity for hearing,
the commissioner may enter an order of rescission, restitution, or
disgorgement, including interest at the rate of eight percent (8%) per
year, directed to a person who has violated this chapter or a rule or
order under this chapter. In addition to all other remedies, the
commissioner may bring an action in the name of and on behalf of
the state against any person participating in or about to participate in
a violation of this chapter, to enjoin the person from continuing or
doing an act furthering a violation of this chapter and may obtain the
appointment of a receiver or conservator. Upon a proper showing by
the commissioner, the court shall enter an order of the commissioner
directing rescission, restitution, or disgorgement against a person
who has violated this chapter or a rule or order under this chapter.
(b) Upon the issuance of an order or a notice by the commissioner
under subsection (a), the commissioner shall promptly notify the
respondent 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 be
set 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 commissioner
does not order a hearing, the order or notice will remain in effect
until it is modified or vacated by the commissioner. If a hearing is
requested or ordered, the commissioner, after giving notice of the
hearing, may modify or vacate the order or extend it until final
determination.
(c) In a final order, the commissioner may charge the costs of an
investigation or a proceeding conducted in connection with a
violation 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 this
section, the commissioner is entitled to recover all costs and
expenses of investigation to which the commissioner would be
entitled in an administrative proceeding, and the court shall include
the costs in its final judgment.
(e) If the commissioner determines, after notice and opportunity
for a hearing, that a person has violated this chapter, the
commissioner may, in addition to or instead of all other remedies,
impose a civil penalty upon the person in an amount not to exceed
ten thousand dollars ($10,000) for each violation. An appeal from the
decision of the commissioner imposing a civil penalty under this
subsection may be taken by an aggrieved party under section 44 of
this chapter.
(f) The commissioner may bring an action in the circuit or
superior court of Marion County to enforce payment of any penalty
imposed under subsection (e).
(g) Penalties collected under this section shall be deposited in the
securities division enforcement account established under
IC 23-19-6-1(f). (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.230-2007, SEC.5; P.L.1-2009, SEC.129.
IC 23-2-2.5-35 Offer of franchise exempt from registration without compliance
with 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 any
franchise exempt from registration under this chapter is being or has
been offered for sale without complying with sections 3 and 27, the
commissioner may order the franchisor or offeror of such franchise
to cease and desist from the further offer or sale of such franchise
unless 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 filed
in writing by the person affected, a hearing shall be held to
commence within fifteen (15) days after the request is made, unless
the 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 is
available concerning any violation of this chapter to the prosecuting
attorney of the county in which the violation occurred, who may,
with or without such a reference, institute appropriate criminal
proceedings under this chapter. If evidence concerning violations of
this chapter is referred to a prosecuting attorney, he shall within
ninety (90) days file with the commissioner a written statement
concerning any action taken or, if no action has been taken, the
reasons 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 commits
a 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 this
chapter, whether or not he has filed a consent to service of process
under section 24 and personal jurisdiction over him cannot otherwise
be obtained in this state, that conduct shall be considered equivalent
to his appointment of the secretary of state or his successor in office
to be his attorney to receive service of any lawful process in any civil
action or proceeding against him or his successor or personal
representative which grows out of that conduct and which is brought
under this chapter, with the same force and validity as if served on
him personally. Service shall be made in accordance with the Indiana
Rules 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 exemption
or classification provided in this chapter, in any civil or criminal
proceeding 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 a
certificate duly signed by the commissioner showing compliance or
noncompliance with this chapter respecting the franchise in question
or respecting compliance or noncompliance with this chapter by any
person constitutes prima facie evidence of such compliance or such
noncompliance 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 the
office of the secretary of state and of any records of the secretary of
state certified by the commissioner are admissible in any civil or
criminal proceeding under this chapter to the same effect as the
original of such statement, document or record would be if actually
produced. (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 the
secretary 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 as
established by IC 23-19-6-1(f), from which all compensation
and expenses shall be paid for the administration of this
chapter.
(b) The fee for filing a form for registration by notification of the
sale of franchises under section 10.5 of this chapter is five hundred
dollars ($500).
(c) The fee for filing a registration renewal form under section 18
of this chapter is two hundred fifty dollars ($250).
(d) When a registration notification form or registration renewal
form is denied or withdrawn, the commissioner shall retain one
hundred fifty dollars ($150) of the fee. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 final
order of the commissioner affecting such person in the same manner
as 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 of
the provisions of this chapter, it is hereby made the duty of the
attorney general of Indiana to render all necessary assistance to the
commissioner upon his request, and to that end the attorney general
shall employ such legal and such other professional services as shall
be necessary to adequately and fully perform such service under the
direction of the commissioner as the demands of the securities
division shall require, and any expenses so incurred by the attorney
general for the purposes aforesaid shall be chargeable against and
paid out of the securities division fund and if such fund is
insufficient for the payment of such expenses and any expenses of
the securities division incident to the administration of this chapter,
then a sufficient sum of money for the payment of any such
deficiency is hereby appropriated annually out of any money
received by the secretary of state as fees for the incorporation and for
the 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 their
individual capacity, except to the state of Indiana, for any act done
or omitted in connection with the performance of their respective
duties 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 granting
power to the secretary of state, the securities division and the
commissioner shall be liberally construed to the end that the practice
or commission of fraud may be prohibited and prevented, disclosure
of sufficient and reliable information in order to afford reasonable
opportunity for the exercise of independent judgment of the persons
involved may be assured, in connection with the issuance, barter,
sale, purchase, transfer or disposition of franchises in this state. It is
the intent and purpose of this chapter to delegate and grant to and
vest in the secretary of state, the securities division and the
commissioner full and complete power to carry into effect and
accomplish the purpose of this chapter and to charge them with full
and 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 information
restricted; copies; destruction
Sec. 48. (a) All registration notification forms, registration
renewal forms, applications to amend registrations, reports, and other
papers and documents filed with the commissioner under this chapter
shall be open to public inspection. The commissioner may publish
any information filed with or obtained by the commissioner. No
provision of this chapter authorizes the commissioner or any of the
commissioner's assistants, clerks, or deputies to disclose any
information withheld from public inspection except among
themselves or when necessary or appropriate in a proceeding or
investigation under this chapter or to other federal or state regulatory
agencies. No provision of this chapter either creates or derogates
from any privilege which exists at common law or otherwise when
documentary or other evidence is sought under a subpoena directed
to the commissioner or any of the commissioner's assistants, clerks,
or deputies.
(b) It is unlawful for the commissioner or any of the
commissioner's assistants, clerks, or deputies to use for personal
benefit any information which is filed with or obtained by the
commissioner and which is not then generally available to the public.
(c) Upon request, and at such reasonable charges as the
commissioner prescribes by rule, the commissioner shall furnish to
any person photostatic or other copies (certified by the commissioner
if certification is requested) of any document which is retained as a
matter of public record, except that the commissioner shall not
charge or collect any fee for photostatic or other copies of any
document furnished to public officers for use in their official
capacity.
(d) The commissioner may destroy any registration notification
forms, together with the files and folders, as useless or obsolete, four
(4) years after the date of registration; provided that a permanent
record shall be maintained of any disciplinary action taken by the
commissioner and of all orders issued under this chapter.
(e) Copies on microfilm or in other form which may be retained
by the commissioner of any records destroyed under this section
shall be accepted for all purposes as equivalent to the original when
certified by the commissioner. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 relieve
corporations or other business organizations from making reports
now 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 be
paid by corporations or other business organizations. This chapter
shall not be construed to repeal any law now in force regulating the
organization of corporations or other business organizations in
Indiana, or the admission of any foreign corporation but the
provisions of this chapter shall be construed to be additional to any
provisions regulating the organization of a corporation or other
business organization under the laws of Indiana, or the admission of
a 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 this
chapter. (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 of
deceased franchisee
Sec. 51. (a) Any designated family member of a deceased service
station franchisee may succeed to the ownership of the existing
agreement if all of the following conditions are met:
(1) The designated family member gives the service station
franchisor written notice of the intention to succeed to the
service station agreement within thirty (30) days of the service
station franchisee's death.
(2) The designated family member agrees to be bound by all
terms and conditions of the existing owner's franchise
agreement.
(3) There is no good cause for the service station franchisor to
refuse to honor the succession.
For purposes of this subsection, the grounds for termination or
nonrenewal of a franchise set out in the federal Petroleum Marketing
Practices Act (15 U.S.C. 2801 et seq.) constitute good cause.
Notification of the refusal must be submitted to the designated family
member in writing within sixty (60) days after the date of the service
station franchisee's death, and must specify the reasons for the
refusal. The form of the written notice required under this subsection
shall be prescribed in the terms of the agreement.
(b) This section does not apply to agreements between franchisors
and service station franchisees entered into or renewed before July
1, 1983. As added by P.L.241-1983, SEC.2.
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 of
dispensing goods or services, under a marketing plan or system
prescribed in substantial part by a franchisor;
(2) the operation of the franchisee's business pursuant to such
a plan is substantially associated with the franchisor's
trademark, service mark, trade name, logotype, advertising, or
other commercial symbol designating the franchisor or its
affiliate; and
(3) the person granted the right to engage in this business is
required to pay a franchise fee.
"Franchise" includes a contract whereby the franchisee is granted
the right to sell franchises on behalf of the franchisor. The term as
defined in subdivisions (1), (2), and (3) does not include a contract
where the franchisee, or any of its officers or directors at the time the
contract is signed, has been in the type of business represented by the
franchise or a similar business for at least two (2) years, and the
parties to the contract anticipated, or should have anticipated, at the
time the contract was entered into that the franchisee's gross sales
derived from the franchised business during the first year of
operations would not exceed twenty percent (20%) of the gross sales
of 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 sale
of, contract to sell, or disposition of, a franchise or interest in a
franchise 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 any
manner of a material fact, any promise or representation or prediction
as to the future not made honestly or in good faith, or the failure or
omission to state a material fact necessary to make the statements
made, in the light of the circumstances under which they were made,
not misleading.
(g) "Offer" or "offer to sell" does not include the renewal or
extension of an existing franchise where there is no interruption in
the 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 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. "Franchise fee" does not include:
(1) the payment of a reasonable service charge to the issuer of
a credit card by an establishment accepting or honoring the
credit card;
(2) amounts paid to a trading stamp company by a person
issuing trading stamps in connection with the retail sale of
goods or services; or
(3) the purchase or agreement to purchase goods at a bona fide
wholesale price.
(j) "Disclosure statement" means the document provided for in
section 13 of this chapter and all amendments to such document.
(k) "Write" or "written" includes printed, lithographed, or
produced by any other means of graphic communication.
(l) "Advertisement" means any published communication which
offers any franchise for sale.
(m) "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.
(n) "Commissioner" means the Indiana securities commissioner
under IC 23-19-6-1(a).
(o) "Service station franchisee" means a person who is granted by
an oil company, refiner, jobber, or other franchisor a supply
franchise agreement or a lease franchise agreement, or both, to sell
gasoline at retail by a metered pump in Indiana.
(p) "Designated family member" means any person named in a
franchise agreement by a service station franchisee as the person
entitled to fulfill the terms of the agreement on behalf of the
franchisee if the franchisee dies before the term of the franchise has
ended. Only the following are eligible to be named as designated
family 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 by
P.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 franchise
will be or is operated in Indiana.
An offer to sell is not made in this state because the franchisor
circulates or there is circulated on his behalf in Indiana an
advertisement in: (1) a bona fide newspaper or other publication of
general, regular and paid circulation which has had more than
two-thirds (2/3) of its circulation outside this state during the past
twelve (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 the
offer or sale of a franchise if the franchisor either sells no more than
one (1) franchise in any twenty-four (24) month period or the
franchisor:
(a) has a net worth:
(1) 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
(2) 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);
(b) has:
(1) 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
(2) 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
(c) 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:
(1) 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.
(2) The franchisor's principal business address and the name
and address of its agent in Indiana authorized to receive
service of process.
(3) The business form of the franchisor and the jurisdiction
under 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 by
the 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 in
use in Indiana.
(6) 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.
(7) 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.
(8) A statement of the conditions under which the franchise
may be terminated, renewal refused, or repurchased.
(9) 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.
(10) A statement as to whether the franchisee is limited in
the goods or services offered by him to his customers.
(11) A statement of the terms and conditions of any
financing agreements.
(12) 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.
(13) If any financial statement concerning estimated profits
or earnings is used, the data upon which the estimate is
based.
(14) 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.
IC 23-2-2.5-4 Exempt franchisees
Sec. 4. The offer of sale of a franchise by a franchisee who is not
an affiliate of the franchisor for his own account is exempt from
section 9 if the offer or sale is not effected by or through a
franchisor. A sale is not effected by or through a franchisor if a
franchisor 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 the
commissioner, by rule or order, exempts as not being comprehended
within the purposes of this law and the registration of which he finds
is not necessary or appropriate in the public interest or for the
protection 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 stop
order 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 public
interest and either:
(a) that there has been a failure to comply with any of the
provisions of this chapter; or
(b) that the offer or sale would constitute misrepresentation to, or
deceit 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 this
chapter, 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 set
down for hearing to commence within fifteen (15) days after
receipt of such request, unless the franchisor consents to a later
date.
(b) If no hearing is requested or none is ordered by the
commissioner, the stop order is effective until it is modified or
vacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, after
notice and hearing, may modify or vacate the stop order. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 proposed
offer or sale is entitled to an exemption. However, the commissioner
may decline to exercise that authority as to any such offer or sale.
Any interested party desiring the commissioner to exercise that
authority shall submit to the commissioner a verified statement of all
material facts relating to the proposed offer or sale, which verified
statement shall be accompanied by a request for a ruling as to the
particular exemption claimed, together with a filing fee of fifty
dollars ($50.00). After such notice to interested parties as the
commissioner deems proper and after a hearing, if any, the
commissioner may enter an order finding the proposed offer or sale
entitled or not entitled to the exemption claimed. Any order so
entered, unless an appeal be taken therefrom in the manner
prescribed in this chapter is binding upon the commissioner and upon
all interested parties if the proposed offer or sale of a franchise when
consummated or issued conforms in every relevant and material
particular 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 is
exempt from such registration under sections 3 through 5 of this
chapter; and
(2) without first providing to the prospective franchisee at least
ten (10) days prior to the execution by the prospective
franchisee of a binding franchise or at least ten (10) days prior
to the receipt by the franchisor of any consideration, whichever
first occurs, a disclosure statement together with a copy of all
proposed contracts relating to the sale of a franchise. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 in
Indiana and who is not exempt under sections 3 through 5 of this
chapter shall register the franchise by notification to the
commissioner 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 do
business.
(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 under
section 13 of this chapter.
(2) The consent to service of process required under section 24
of this chapter, unless consent has previously been filed by the
person.
(3) The registration fee required under section 43 of this
chapter.
(c) A franchisor may register only one (1) franchise for each
notification.
(d) The registration of a franchise under this section is effective
upon the commissioner's receipt of the notification. The notification
is effective for one (1) year from the date of the commissioner's
receipt of the notification.
(e) During the one (1) year registration period, a person is not
required to file with the commissioner any supplemental information,
including any amendments to the disclosure statement, unless the
commissioner, acting under the commissioner's authority to suspend
or revoke a registration under section 14 of this chapter, requests the
information. As added by P.L.168-2001, SEC.2.
IC 23-2-2.5-11 Signatures and verifications
Sec. 11. Registration notification forms, registration renewal
forms, and amendments thereto, shall be signed and verified by the
franchisor. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 adequate
financial arrangements have been made to fulfill obligations to
provide real estate, improvements, equipment, inventory,
training, or other items included in the offering; and
(2) the escrow or impoundment of franchise fees is necessary
and appropriate to protect prospective franchisees;
the commissioner may by order require the escrow or impoundment
of franchise fees and other funds paid by the franchisee until no later
than the time of opening of the business of the franchisee. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.168-2001, SEC.4.
IC 23-2-2.5-13 Disclosure statements
Sec. 13. A registration notification form filed under section 10.5
of this chapter shall be accompanied by the fee prescribed in section
43 of this chapter and by one (1) copy of a disclosure statement. The
disclosure statement shall be in a form prescribed by the
commissioner or in a form permitted under 16 CFR 436, as amended. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 a
stop order denying the effectiveness of or suspending or revoking the
effectiveness of a registration if the commissioner finds that the
issuance 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 constitute
misrepresentation to, or deceit or fraud on, the purchasers or
offerees;
(3) the franchisor has failed to comply with any rule
promulgated or order issued pursuant to section 12 of this
chapter; or
(4) the franchisor, or the franchisor's predecessor, or any of the
franchisor's directors, trustees, general partners, chief
executives, financial officers, accounting officers, franchise
sales officers, or other principal officers, or, if the franchisor is
a limited liability company, any member or manager of the
franchisor:
(A) during the ten (10) year period immediately preceding
the 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 or
federal statute involving the offer or sale of securities or
franchises;
(B) is subject to any currently effective order affecting the
franchise resulting from a proceeding or pending action
brought by any individual or public agency or department;
(C) is a defendant in any pending criminal or material civil
proceeding;
(D) during the ten (10) year period immediately preceding
the date of registration, has been the defendant against whom
a final judgment was entered in any material civil action; or
(E) is the franchisor or a principal executive officer or
general 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 a
bankrupt.
(b) An order issued under this section based on a finding by the
commissioner under subsection (a)(4)(A) must include a description
of the charge, violation, or judgment referred to in subsection
(a)(4)(A). An order issued under this section based on a finding by
the commissioner under subsection (a)(4)(B) must include a copy of
the order referred to in subsection (a)(4)(B). An order issued under
this section based on a finding by the commissioner under subsection
(a)(4)(D) must include a description of the judgment referred to in
subsection (a)(4)(D). An order issued under this section based on a
finding by the commissioner under subsection (a)(4)(E) must include
a description of the insolvency or adjudication referred to in
subsection (a)(4)(E).
(c) Before issuing a stop order under subsection (a)(4), such an
order must be based on a finding by the commissioner that
involvement 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 by
P.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 this
chapter, 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 set
down for hearing to commence within fifteen (15) days after
receipt of such request, unless the franchisor consents to a later
date.
(b) If no hearing is requested or none is ordered by the
commissioner, the stop order is effective until it is modified or
vacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, after
notice and hearing, may modify or vacate the stop order. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 if
he finds that the conditions which caused its entry have changed or
that 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 in
effect, registration by notification takes effect upon the
commissioner's receipt of the notification form. A registration by
notification is effective for a period of one (1) year. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.168-2001, SEC.8.
IC 23-2-2.5-18 Renewal of registration; period
Sec. 18. A registration by notification may be renewed by
submitting to the commissioner a registration renewal form not later
than the date the registration is due to expire. If no stop order or
other order under section 14 of this chapter is in effect, registration
of the offer is renewed at the time the registration would have
expired. A renewal is effective for a period of one (1) year unless the
commissioner specified a shorter period. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 and
contain the content prescribed by the commissioner and shall be
accompanied by one (1) copy of the proposed disclosure statement.
Each such registration renewal form shall be accompanied by the fee
prescribed in section 43 of this chapter. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 shall
maintain a complete set of books, records, and accounts of those
sales. (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 a
franchisor or any interested party, on any question of fact concerning
the franchises proposed to be offered or sold. The commissioner may
also have any or all matters concerning those franchises investigated,
appraised, passed upon or certified to the commissioner by any
experts selected by the commissioner, at the expense of the
franchisor. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 a
registration notification form has been submitted to the
commissioner 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 filed
under this chapter is true, complete, or not misleading. Neither any
such fact nor the fact that an exemption is available for a transaction
means that the commissioner has passed in any way upon the merits
or qualifications of, or recommended or given approval to, any
person, franchise or transaction.
(b) A person may not make or cause to be made to any
prospective purchaser or offeree any representation inconsistent with
subsection (a).
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 this
chapter, the person shall file with the commissioner, in the form that
the commissioner by rule or order prescribes, an irrevocable consent
appointing the secretary of state or any successor secretary of state
to be the person's attorney to receive service of any lawful process in
any noncriminal suit, action, or proceeding against the person or the
person's successor, executor, or administrator that arises under this
chapter or any rule or order under this chapter after the consent has
been filed with the same force as if served personally on the person
filing the consent. A person who has filed a consent with the
commissioner for a previous registration or exemption under this
chapter is not required to file another consent. The person's previous
consent shall remain effective for all subsequent registrations or
exemptions filed by the person under this chapter. Service shall be
made 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 any
advertisement concerning any franchise in Indiana after the
commissioner finds that the advertisement contains any statement
that is false, is misleading or omits to make any statement necessary
in order to make the statements made, in light of the circumstances
under which they were made, not misleading and so notifies the
person in writing. Such notification may be given without notice of
hearing. At any time after the issuance of a notification under this
section, the person desiring to use the advertisement may request in
writing that the order be rescinded. Upon the receipt of such written
request, the matter shall be set down for hearing to commence within
fifteen (15) days after receipt of the request unless the person making
that 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 the
commissioner, 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 to
make the statements made, in the light of circumstances under which
they are made, not misleading; or (3) to engage in any act which
operates 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 this
chapter may recover, as part of that judgment: (1) any consequential
damages; (2) interest at eight percent (8%) on the judgment; and (3)
reasonable attorney's fees; unless the defendant proves that the
plaintiff knew the facts concerning the violation, or that the
defendant exercised reasonable care and did not know, or, if he had
exercised reasonable care, would not have known, of the facts
concerning 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 or
transaction constituting a violation of this chapter is also liable
jointly and severally to the same extent as the person whom he aided
and abetted, unless the person who aided and abetted had no
knowledge of or reasonable grounds to believe in the existence of the
facts 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 any
liability created under this chapter unless brought before the
expiration of three (3) years after discovery by the plaintiff of the
facts 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 death
of 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 person
has engaged or is about to engage in any act or practice constituting
a violation of any provision of this chapter or any rule or order
hereunder, he may in his discretion bring an action in the appropriate
circuit or superior court to enjoin the acts or practices, to enforce
compliance with this chapter, or to obtain any other appropriate
remedy. Upon proper showing, a permanent or preliminary
injunction, restraining order, declaratory judgment or other
appropriate remedy shall be granted and, in addition to and
independent of any other remedy granted herein, a receiver or
conservator may be appointed for the defendant or the defendant's
assets. 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 such
investigations as he deems necessary to determine whether any
person has violated or is about to violate any provision of this
chapter.
(b) For the purpose of any investigation or proceeding under this
chapter, the commissioner or his representative may administer oaths
and affirmations, subpoena witnesses, compel their attendance, take
evidence, and require the production of any books, papers,
correspondence, memoranda, agreements, or other documents or
records which the commissioner deems material to the inquiry.
(c) Upon order of the commissioner or his representative in any
hearing, depositions may be taken of any witness, to be taken in the
manner prescribed by law for depositions in civil actions, and made
returnable to the commissioner or his representative.
(d) In case of failure by any person to obey a subpoena, the circuit
or superior court, upon application by the commissioner, may issue
to the person an order requiring him to appear before the
commissioner, or his representative, there to produce documentary
evidence, if so ordered, or to give evidence touching the matter under
investigation.
(e) No person is excused from attending and testifying or from
producing any document or record before the commissioner, or in
obedience to the subpoena of the commissioner, or his representative,
or in any proceeding instituted by the commissioner, on the grounds
that the testimony or evidence, documentary or otherwise, required
of him may tend to incriminate him or subject him to a penalty or
forfeiture; but no person may be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter, or
thing concerning which he is compelled, after validly claiming his
privilege against self-incrimination, to testify or produce evidence
documentary 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 this
chapter and it is being, or it has been, offered for sale without
such offer first being registered; or
(2) a person has engaged in or is about to engage in an act, a
practice, or a course of business constituting a violation of this
chapter or a rule or an order under this chapter;
the commissioner may investigate and may issue, with or without a
prior hearing, orders and notices as the commissioner determines to
be in the public interest, including cease and desist orders, orders to
show cause, and notices. After notice and an opportunity for hearing,
the commissioner may enter an order of rescission, restitution, or
disgorgement, including interest at the rate of eight percent (8%) per
year, directed to a person who has violated this chapter or a rule or
order under this chapter. In addition to all other remedies, the
commissioner may bring an action in the name of and on behalf of
the state against any person participating in or about to participate in
a violation of this chapter, to enjoin the person from continuing or
doing an act furthering a violation of this chapter and may obtain the
appointment of a receiver or conservator. Upon a proper showing by
the commissioner, the court shall enter an order of the commissioner
directing rescission, restitution, or disgorgement against a person
who has violated this chapter or a rule or order under this chapter.
(b) Upon the issuance of an order or a notice by the commissioner
under subsection (a), the commissioner shall promptly notify the
respondent 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 be
set 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 commissioner
does not order a hearing, the order or notice will remain in effect
until it is modified or vacated by the commissioner. If a hearing is
requested or ordered, the commissioner, after giving notice of the
hearing, may modify or vacate the order or extend it until final
determination.
(c) In a final order, the commissioner may charge the costs of an
investigation or a proceeding conducted in connection with a
violation 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 this
section, the commissioner is entitled to recover all costs and
expenses of investigation to which the commissioner would be
entitled in an administrative proceeding, and the court shall include
the costs in its final judgment.
(e) If the commissioner determines, after notice and opportunity
for a hearing, that a person has violated this chapter, the
commissioner may, in addition to or instead of all other remedies,
impose a civil penalty upon the person in an amount not to exceed
ten thousand dollars ($10,000) for each violation. An appeal from the
decision of the commissioner imposing a civil penalty under this
subsection may be taken by an aggrieved party under section 44 of
this chapter.
(f) The commissioner may bring an action in the circuit or
superior court of Marion County to enforce payment of any penalty
imposed under subsection (e).
(g) Penalties collected under this section shall be deposited in the
securities division enforcement account established under
IC 23-19-6-1(f). (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.230-2007, SEC.5; P.L.1-2009, SEC.129.
IC 23-2-2.5-35 Offer of franchise exempt from registration without compliance
with 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 any
franchise exempt from registration under this chapter is being or has
been offered for sale without complying with sections 3 and 27, the
commissioner may order the franchisor or offeror of such franchise
to cease and desist from the further offer or sale of such franchise
unless 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 filed
in writing by the person affected, a hearing shall be held to
commence within fifteen (15) days after the request is made, unless
the 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 is
available concerning any violation of this chapter to the prosecuting
attorney of the county in which the violation occurred, who may,
with or without such a reference, institute appropriate criminal
proceedings under this chapter. If evidence concerning violations of
this chapter is referred to a prosecuting attorney, he shall within
ninety (90) days file with the commissioner a written statement
concerning any action taken or, if no action has been taken, the
reasons 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 commits
a 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 this
chapter, whether or not he has filed a consent to service of process
under section 24 and personal jurisdiction over him cannot otherwise
be obtained in this state, that conduct shall be considered equivalent
to his appointment of the secretary of state or his successor in office
to be his attorney to receive service of any lawful process in any civil
action or proceeding against him or his successor or personal
representative which grows out of that conduct and which is brought
under this chapter, with the same force and validity as if served on
him personally. Service shall be made in accordance with the Indiana
Rules 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 exemption
or classification provided in this chapter, in any civil or criminal
proceeding 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 a
certificate duly signed by the commissioner showing compliance or
noncompliance with this chapter respecting the franchise in question
or respecting compliance or noncompliance with this chapter by any
person constitutes prima facie evidence of such compliance or such
noncompliance 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 the
office of the secretary of state and of any records of the secretary of
state certified by the commissioner are admissible in any civil or
criminal proceeding under this chapter to the same effect as the
original of such statement, document or record would be if actually
produced. (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 the
secretary 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 as
established by IC 23-19-6-1(f), from which all compensation
and expenses shall be paid for the administration of this
chapter.
(b) The fee for filing a form for registration by notification of the
sale of franchises under section 10.5 of this chapter is five hundred
dollars ($500).
(c) The fee for filing a registration renewal form under section 18
of this chapter is two hundred fifty dollars ($250).
(d) When a registration notification form or registration renewal
form is denied or withdrawn, the commissioner shall retain one
hundred fifty dollars ($150) of the fee. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 final
order of the commissioner affecting such person in the same manner
as 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 of
the provisions of this chapter, it is hereby made the duty of the
attorney general of Indiana to render all necessary assistance to the
commissioner upon his request, and to that end the attorney general
shall employ such legal and such other professional services as shall
be necessary to adequately and fully perform such service under the
direction of the commissioner as the demands of the securities
division shall require, and any expenses so incurred by the attorney
general for the purposes aforesaid shall be chargeable against and
paid out of the securities division fund and if such fund is
insufficient for the payment of such expenses and any expenses of
the securities division incident to the administration of this chapter,
then a sufficient sum of money for the payment of any such
deficiency is hereby appropriated annually out of any money
received by the secretary of state as fees for the incorporation and for
the 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 their
individual capacity, except to the state of Indiana, for any act done
or omitted in connection with the performance of their respective
duties 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 granting
power to the secretary of state, the securities division and the
commissioner shall be liberally construed to the end that the practice
or commission of fraud may be prohibited and prevented, disclosure
of sufficient and reliable information in order to afford reasonable
opportunity for the exercise of independent judgment of the persons
involved may be assured, in connection with the issuance, barter,
sale, purchase, transfer or disposition of franchises in this state. It is
the intent and purpose of this chapter to delegate and grant to and
vest in the secretary of state, the securities division and the
commissioner full and complete power to carry into effect and
accomplish the purpose of this chapter and to charge them with full
and 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 information
restricted; copies; destruction
Sec. 48. (a) All registration notification forms, registration
renewal forms, applications to amend registrations, reports, and other
papers and documents filed with the commissioner under this chapter
shall be open to public inspection. The commissioner may publish
any information filed with or obtained by the commissioner. No
provision of this chapter authorizes the commissioner or any of the
commissioner's assistants, clerks, or deputies to disclose any
information withheld from public inspection except among
themselves or when necessary or appropriate in a proceeding or
investigation under this chapter or to other federal or state regulatory
agencies. No provision of this chapter either creates or derogates
from any privilege which exists at common law or otherwise when
documentary or other evidence is sought under a subpoena directed
to the commissioner or any of the commissioner's assistants, clerks,
or deputies.
(b) It is unlawful for the commissioner or any of the
commissioner's assistants, clerks, or deputies to use for personal
benefit any information which is filed with or obtained by the
commissioner and which is not then generally available to the public.
(c) Upon request, and at such reasonable charges as the
commissioner prescribes by rule, the commissioner shall furnish to
any person photostatic or other copies (certified by the commissioner
if certification is requested) of any document which is retained as a
matter of public record, except that the commissioner shall not
charge or collect any fee for photostatic or other copies of any
document furnished to public officers for use in their official
capacity.
(d) The commissioner may destroy any registration notification
forms, together with the files and folders, as useless or obsolete, four
(4) years after the date of registration; provided that a permanent
record shall be maintained of any disciplinary action taken by the
commissioner and of all orders issued under this chapter.
(e) Copies on microfilm or in other form which may be retained
by the commissioner of any records destroyed under this section
shall be accepted for all purposes as equivalent to the original when
certified by the commissioner. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 relieve
corporations or other business organizations from making reports
now 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 be
paid by corporations or other business organizations. This chapter
shall not be construed to repeal any law now in force regulating the
organization of corporations or other business organizations in
Indiana, or the admission of any foreign corporation but the
provisions of this chapter shall be construed to be additional to any
provisions regulating the organization of a corporation or other
business organization under the laws of Indiana, or the admission of
a 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 this
chapter. (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 of
deceased franchisee
Sec. 51. (a) Any designated family member of a deceased service
station franchisee may succeed to the ownership of the existing
agreement if all of the following conditions are met:
(1) The designated family member gives the service station
franchisor written notice of the intention to succeed to the
service station agreement within thirty (30) days of the service
station franchisee's death.
(2) The designated family member agrees to be bound by all
terms and conditions of the existing owner's franchise
agreement.
(3) There is no good cause for the service station franchisor to
refuse to honor the succession.
For purposes of this subsection, the grounds for termination or
nonrenewal of a franchise set out in the federal Petroleum Marketing
Practices Act (15 U.S.C. 2801 et seq.) constitute good cause.
Notification of the refusal must be submitted to the designated family
member in writing within sixty (60) days after the date of the service
station franchisee's death, and must specify the reasons for the
refusal. The form of the written notice required under this subsection
shall be prescribed in the terms of the agreement.
(b) This section does not apply to agreements between franchisors
and service station franchisees entered into or renewed before July
1, 1983. As added by P.L.241-1983, SEC.2.
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 of
dispensing goods or services, under a marketing plan or system
prescribed in substantial part by a franchisor;
(2) the operation of the franchisee's business pursuant to such
a plan is substantially associated with the franchisor's
trademark, service mark, trade name, logotype, advertising, or
other commercial symbol designating the franchisor or its
affiliate; and
(3) the person granted the right to engage in this business is
required to pay a franchise fee.
"Franchise" includes a contract whereby the franchisee is granted
the right to sell franchises on behalf of the franchisor. The term as
defined in subdivisions (1), (2), and (3) does not include a contract
where the franchisee, or any of its officers or directors at the time the
contract is signed, has been in the type of business represented by the
franchise or a similar business for at least two (2) years, and the
parties to the contract anticipated, or should have anticipated, at the
time the contract was entered into that the franchisee's gross sales
derived from the franchised business during the first year of
operations would not exceed twenty percent (20%) of the gross sales
of 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 sale
of, contract to sell, or disposition of, a franchise or interest in a
franchise 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 any
manner of a material fact, any promise or representation or prediction
as to the future not made honestly or in good faith, or the failure or
omission to state a material fact necessary to make the statements
made, in the light of the circumstances under which they were made,
not misleading.
(g) "Offer" or "offer to sell" does not include the renewal or
extension of an existing franchise where there is no interruption in
the 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 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. "Franchise fee" does not include:
(1) the payment of a reasonable service charge to the issuer of
a credit card by an establishment accepting or honoring the
credit card;
(2) amounts paid to a trading stamp company by a person
issuing trading stamps in connection with the retail sale of
goods or services; or
(3) the purchase or agreement to purchase goods at a bona fide
wholesale price.
(j) "Disclosure statement" means the document provided for in
section 13 of this chapter and all amendments to such document.
(k) "Write" or "written" includes printed, lithographed, or
produced by any other means of graphic communication.
(l) "Advertisement" means any published communication which
offers any franchise for sale.
(m) "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.
(n) "Commissioner" means the Indiana securities commissioner
under IC 23-19-6-1(a).
(o) "Service station franchisee" means a person who is granted by
an oil company, refiner, jobber, or other franchisor a supply
franchise agreement or a lease franchise agreement, or both, to sell
gasoline at retail by a metered pump in Indiana.
(p) "Designated family member" means any person named in a
franchise agreement by a service station franchisee as the person
entitled to fulfill the terms of the agreement on behalf of the
franchisee if the franchisee dies before the term of the franchise has
ended. Only the following are eligible to be named as designated
family 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 by
P.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 franchise
will be or is operated in Indiana.
An offer to sell is not made in this state because the franchisor
circulates or there is circulated on his behalf in Indiana an
advertisement in: (1) a bona fide newspaper or other publication of
general, regular and paid circulation which has had more than
two-thirds (2/3) of its circulation outside this state during the past
twelve (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 the
offer or sale of a franchise if the franchisor either sells no more than
one (1) franchise in any twenty-four (24) month period or the
franchisor:
(a) has a net worth:
(1) 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
(2) 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);
(b) has:
(1) 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
(2) 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
(c) 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:
(1) 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.
(2) The franchisor's principal business address and the name
and address of its agent in Indiana authorized to receive
service of process.
(3) The business form of the franchisor and the jurisdiction
under 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 by
the 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 in
use in Indiana.
(6) 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.
(7) 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.
(8) A statement of the conditions under which the franchise
may be terminated, renewal refused, or repurchased.
(9) 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.
(10) A statement as to whether the franchisee is limited in
the goods or services offered by him to his customers.
(11) A statement of the terms and conditions of any
financing agreements.
(12) 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.
(13) If any financial statement concerning estimated profits
or earnings is used, the data upon which the estimate is
based.
(14) 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.
IC 23-2-2.5-4 Exempt franchisees
Sec. 4. The offer of sale of a franchise by a franchisee who is not
an affiliate of the franchisor for his own account is exempt from
section 9 if the offer or sale is not effected by or through a
franchisor. A sale is not effected by or through a franchisor if a
franchisor 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 the
commissioner, by rule or order, exempts as not being comprehended
within the purposes of this law and the registration of which he finds
is not necessary or appropriate in the public interest or for the
protection 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 stop
order 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 public
interest and either:
(a) that there has been a failure to comply with any of the
provisions of this chapter; or
(b) that the offer or sale would constitute misrepresentation to, or
deceit 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 this
chapter, 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 set
down for hearing to commence within fifteen (15) days after
receipt of such request, unless the franchisor consents to a later
date.
(b) If no hearing is requested or none is ordered by the
commissioner, the stop order is effective until it is modified or
vacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, after
notice and hearing, may modify or vacate the stop order. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 proposed
offer or sale is entitled to an exemption. However, the commissioner
may decline to exercise that authority as to any such offer or sale.
Any interested party desiring the commissioner to exercise that
authority shall submit to the commissioner a verified statement of all
material facts relating to the proposed offer or sale, which verified
statement shall be accompanied by a request for a ruling as to the
particular exemption claimed, together with a filing fee of fifty
dollars ($50.00). After such notice to interested parties as the
commissioner deems proper and after a hearing, if any, the
commissioner may enter an order finding the proposed offer or sale
entitled or not entitled to the exemption claimed. Any order so
entered, unless an appeal be taken therefrom in the manner
prescribed in this chapter is binding upon the commissioner and upon
all interested parties if the proposed offer or sale of a franchise when
consummated or issued conforms in every relevant and material
particular 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 is
exempt from such registration under sections 3 through 5 of this
chapter; and
(2) without first providing to the prospective franchisee at least
ten (10) days prior to the execution by the prospective
franchisee of a binding franchise or at least ten (10) days prior
to the receipt by the franchisor of any consideration, whichever
first occurs, a disclosure statement together with a copy of all
proposed contracts relating to the sale of a franchise. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 in
Indiana and who is not exempt under sections 3 through 5 of this
chapter shall register the franchise by notification to the
commissioner 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 do
business.
(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 under
section 13 of this chapter.
(2) The consent to service of process required under section 24
of this chapter, unless consent has previously been filed by the
person.
(3) The registration fee required under section 43 of this
chapter.
(c) A franchisor may register only one (1) franchise for each
notification.
(d) The registration of a franchise under this section is effective
upon the commissioner's receipt of the notification. The notification
is effective for one (1) year from the date of the commissioner's
receipt of the notification.
(e) During the one (1) year registration period, a person is not
required to file with the commissioner any supplemental information,
including any amendments to the disclosure statement, unless the
commissioner, acting under the commissioner's authority to suspend
or revoke a registration under section 14 of this chapter, requests the
information. As added by P.L.168-2001, SEC.2.
IC 23-2-2.5-11 Signatures and verifications
Sec. 11. Registration notification forms, registration renewal
forms, and amendments thereto, shall be signed and verified by the
franchisor. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 adequate
financial arrangements have been made to fulfill obligations to
provide real estate, improvements, equipment, inventory,
training, or other items included in the offering; and
(2) the escrow or impoundment of franchise fees is necessary
and appropriate to protect prospective franchisees;
the commissioner may by order require the escrow or impoundment
of franchise fees and other funds paid by the franchisee until no later
than the time of opening of the business of the franchisee. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.168-2001, SEC.4.
IC 23-2-2.5-13 Disclosure statements
Sec. 13. A registration notification form filed under section 10.5
of this chapter shall be accompanied by the fee prescribed in section
43 of this chapter and by one (1) copy of a disclosure statement. The
disclosure statement shall be in a form prescribed by the
commissioner or in a form permitted under 16 CFR 436, as amended. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 a
stop order denying the effectiveness of or suspending or revoking the
effectiveness of a registration if the commissioner finds that the
issuance 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 constitute
misrepresentation to, or deceit or fraud on, the purchasers or
offerees;
(3) the franchisor has failed to comply with any rule
promulgated or order issued pursuant to section 12 of this
chapter; or
(4) the franchisor, or the franchisor's predecessor, or any of the
franchisor's directors, trustees, general partners, chief
executives, financial officers, accounting officers, franchise
sales officers, or other principal officers, or, if the franchisor is
a limited liability company, any member or manager of the
franchisor:
(A) during the ten (10) year period immediately preceding
the 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 or
federal statute involving the offer or sale of securities or
franchises;
(B) is subject to any currently effective order affecting the
franchise resulting from a proceeding or pending action
brought by any individual or public agency or department;
(C) is a defendant in any pending criminal or material civil
proceeding;
(D) during the ten (10) year period immediately preceding
the date of registration, has been the defendant against whom
a final judgment was entered in any material civil action; or
(E) is the franchisor or a principal executive officer or
general 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 a
bankrupt.
(b) An order issued under this section based on a finding by the
commissioner under subsection (a)(4)(A) must include a description
of the charge, violation, or judgment referred to in subsection
(a)(4)(A). An order issued under this section based on a finding by
the commissioner under subsection (a)(4)(B) must include a copy of
the order referred to in subsection (a)(4)(B). An order issued under
this section based on a finding by the commissioner under subsection
(a)(4)(D) must include a description of the judgment referred to in
subsection (a)(4)(D). An order issued under this section based on a
finding by the commissioner under subsection (a)(4)(E) must include
a description of the insolvency or adjudication referred to in
subsection (a)(4)(E).
(c) Before issuing a stop order under subsection (a)(4), such an
order must be based on a finding by the commissioner that
involvement 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 by
P.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 this
chapter, 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 set
down for hearing to commence within fifteen (15) days after
receipt of such request, unless the franchisor consents to a later
date.
(b) If no hearing is requested or none is ordered by the
commissioner, the stop order is effective until it is modified or
vacated by the commissioner.
(c) If a hearing is requested or ordered, the commissioner, after
notice and hearing, may modify or vacate the stop order. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 if
he finds that the conditions which caused its entry have changed or
that 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 in
effect, registration by notification takes effect upon the
commissioner's receipt of the notification form. A registration by
notification is effective for a period of one (1) year. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.168-2001, SEC.8.
IC 23-2-2.5-18 Renewal of registration; period
Sec. 18. A registration by notification may be renewed by
submitting to the commissioner a registration renewal form not later
than the date the registration is due to expire. If no stop order or
other order under section 14 of this chapter is in effect, registration
of the offer is renewed at the time the registration would have
expired. A renewal is effective for a period of one (1) year unless the
commissioner specified a shorter period. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 and
contain the content prescribed by the commissioner and shall be
accompanied by one (1) copy of the proposed disclosure statement.
Each such registration renewal form shall be accompanied by the fee
prescribed in section 43 of this chapter. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 shall
maintain a complete set of books, records, and accounts of those
sales. (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 a
franchisor or any interested party, on any question of fact concerning
the franchises proposed to be offered or sold. The commissioner may
also have any or all matters concerning those franchises investigated,
appraised, passed upon or certified to the commissioner by any
experts selected by the commissioner, at the expense of the
franchisor. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 a
registration notification form has been submitted to the
commissioner 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 filed
under this chapter is true, complete, or not misleading. Neither any
such fact nor the fact that an exemption is available for a transaction
means that the commissioner has passed in any way upon the merits
or qualifications of, or recommended or given approval to, any
person, franchise or transaction.
(b) A person may not make or cause to be made to any
prospective purchaser or offeree any representation inconsistent with
subsection (a).
(Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 this
chapter, the person shall file with the commissioner, in the form that
the commissioner by rule or order prescribes, an irrevocable consent
appointing the secretary of state or any successor secretary of state
to be the person's attorney to receive service of any lawful process in
any noncriminal suit, action, or proceeding against the person or the
person's successor, executor, or administrator that arises under this
chapter or any rule or order under this chapter after the consent has
been filed with the same force as if served personally on the person
filing the consent. A person who has filed a consent with the
commissioner for a previous registration or exemption under this
chapter is not required to file another consent. The person's previous
consent shall remain effective for all subsequent registrations or
exemptions filed by the person under this chapter. Service shall be
made 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 any
advertisement concerning any franchise in Indiana after the
commissioner finds that the advertisement contains any statement
that is false, is misleading or omits to make any statement necessary
in order to make the statements made, in light of the circumstances
under which they were made, not misleading and so notifies the
person in writing. Such notification may be given without notice of
hearing. At any time after the issuance of a notification under this
section, the person desiring to use the advertisement may request in
writing that the order be rescinded. Upon the receipt of such written
request, the matter shall be set down for hearing to commence within
fifteen (15) days after receipt of the request unless the person making
that 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 the
commissioner, 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 to
make the statements made, in the light of circumstances under which
they are made, not misleading; or (3) to engage in any act which
operates 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 this
chapter may recover, as part of that judgment: (1) any consequential
damages; (2) interest at eight percent (8%) on the judgment; and (3)
reasonable attorney's fees; unless the defendant proves that the
plaintiff knew the facts concerning the violation, or that the
defendant exercised reasonable care and did not know, or, if he had
exercised reasonable care, would not have known, of the facts
concerning 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 or
transaction constituting a violation of this chapter is also liable
jointly and severally to the same extent as the person whom he aided
and abetted, unless the person who aided and abetted had no
knowledge of or reasonable grounds to believe in the existence of the
facts 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 any
liability created under this chapter unless brought before the
expiration of three (3) years after discovery by the plaintiff of the
facts 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 death
of 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 person
has engaged or is about to engage in any act or practice constituting
a violation of any provision of this chapter or any rule or order
hereunder, he may in his discretion bring an action in the appropriate
circuit or superior court to enjoin the acts or practices, to enforce
compliance with this chapter, or to obtain any other appropriate
remedy. Upon proper showing, a permanent or preliminary
injunction, restraining order, declaratory judgment or other
appropriate remedy shall be granted and, in addition to and
independent of any other remedy granted herein, a receiver or
conservator may be appointed for the defendant or the defendant's
assets. 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 such
investigations as he deems necessary to determine whether any
person has violated or is about to violate any provision of this
chapter.
(b) For the purpose of any investigation or proceeding under this
chapter, the commissioner or his representative may administer oaths
and affirmations, subpoena witnesses, compel their attendance, take
evidence, and require the production of any books, papers,
correspondence, memoranda, agreements, or other documents or
records which the commissioner deems material to the inquiry.
(c) Upon order of the commissioner or his representative in any
hearing, depositions may be taken of any witness, to be taken in the
manner prescribed by law for depositions in civil actions, and made
returnable to the commissioner or his representative.
(d) In case of failure by any person to obey a subpoena, the circuit
or superior court, upon application by the commissioner, may issue
to the person an order requiring him to appear before the
commissioner, or his representative, there to produce documentary
evidence, if so ordered, or to give evidence touching the matter under
investigation.
(e) No person is excused from attending and testifying or from
producing any document or record before the commissioner, or in
obedience to the subpoena of the commissioner, or his representative,
or in any proceeding instituted by the commissioner, on the grounds
that the testimony or evidence, documentary or otherwise, required
of him may tend to incriminate him or subject him to a penalty or
forfeiture; but no person may be prosecuted or subjected to any
penalty or forfeiture for or on account of any transaction, matter, or
thing concerning which he is compelled, after validly claiming his
privilege against self-incrimination, to testify or produce evidence
documentary 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 this
chapter and it is being, or it has been, offered for sale without
such offer first being registered; or
(2) a person has engaged in or is about to engage in an act, a
practice, or a course of business constituting a violation of this
chapter or a rule or an order under this chapter;
the commissioner may investigate and may issue, with or without a
prior hearing, orders and notices as the commissioner determines to
be in the public interest, including cease and desist orders, orders to
show cause, and notices. After notice and an opportunity for hearing,
the commissioner may enter an order of rescission, restitution, or
disgorgement, including interest at the rate of eight percent (8%) per
year, directed to a person who has violated this chapter or a rule or
order under this chapter. In addition to all other remedies, the
commissioner may bring an action in the name of and on behalf of
the state against any person participating in or about to participate in
a violation of this chapter, to enjoin the person from continuing or
doing an act furthering a violation of this chapter and may obtain the
appointment of a receiver or conservator. Upon a proper showing by
the commissioner, the court shall enter an order of the commissioner
directing rescission, restitution, or disgorgement against a person
who has violated this chapter or a rule or order under this chapter.
(b) Upon the issuance of an order or a notice by the commissioner
under subsection (a), the commissioner shall promptly notify the
respondent 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 be
set 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 commissioner
does not order a hearing, the order or notice will remain in effect
until it is modified or vacated by the commissioner. If a hearing is
requested or ordered, the commissioner, after giving notice of the
hearing, may modify or vacate the order or extend it until final
determination.
(c) In a final order, the commissioner may charge the costs of an
investigation or a proceeding conducted in connection with a
violation 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 this
section, the commissioner is entitled to recover all costs and
expenses of investigation to which the commissioner would be
entitled in an administrative proceeding, and the court shall include
the costs in its final judgment.
(e) If the commissioner determines, after notice and opportunity
for a hearing, that a person has violated this chapter, the
commissioner may, in addition to or instead of all other remedies,
impose a civil penalty upon the person in an amount not to exceed
ten thousand dollars ($10,000) for each violation. An appeal from the
decision of the commissioner imposing a civil penalty under this
subsection may be taken by an aggrieved party under section 44 of
this chapter.
(f) The commissioner may bring an action in the circuit or
superior court of Marion County to enforce payment of any penalty
imposed under subsection (e).
(g) Penalties collected under this section shall be deposited in the
securities division enforcement account established under
IC 23-19-6-1(f). (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.L.230-2007, SEC.5; P.L.1-2009, SEC.129.
IC 23-2-2.5-35 Offer of franchise exempt from registration without compliance
with 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 any
franchise exempt from registration under this chapter is being or has
been offered for sale without complying with sections 3 and 27, the
commissioner may order the franchisor or offeror of such franchise
to cease and desist from the further offer or sale of such franchise
unless 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 filed
in writing by the person affected, a hearing shall be held to
commence within fifteen (15) days after the request is made, unless
the 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 is
available concerning any violation of this chapter to the prosecuting
attorney of the county in which the violation occurred, who may,
with or without such a reference, institute appropriate criminal
proceedings under this chapter. If evidence concerning violations of
this chapter is referred to a prosecuting attorney, he shall within
ninety (90) days file with the commissioner a written statement
concerning any action taken or, if no action has been taken, the
reasons 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 commits
a 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 this
chapter, whether or not he has filed a consent to service of process
under section 24 and personal jurisdiction over him cannot otherwise
be obtained in this state, that conduct shall be considered equivalent
to his appointment of the secretary of state or his successor in office
to be his attorney to receive service of any lawful process in any civil
action or proceeding against him or his successor or personal
representative which grows out of that conduct and which is brought
under this chapter, with the same force and validity as if served on
him personally. Service shall be made in accordance with the Indiana
Rules 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 exemption
or classification provided in this chapter, in any civil or criminal
proceeding 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 a
certificate duly signed by the commissioner showing compliance or
noncompliance with this chapter respecting the franchise in question
or respecting compliance or noncompliance with this chapter by any
person constitutes prima facie evidence of such compliance or such
noncompliance 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 the
office of the secretary of state and of any records of the secretary of
state certified by the commissioner are admissible in any civil or
criminal proceeding under this chapter to the same effect as the
original of such statement, document or record would be if actually
produced. (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 the
secretary 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 as
established by IC 23-19-6-1(f), from which all compensation
and expenses shall be paid for the administration of this
chapter.
(b) The fee for filing a form for registration by notification of the
sale of franchises under section 10.5 of this chapter is five hundred
dollars ($500).
(c) The fee for filing a registration renewal form under section 18
of this chapter is two hundred fifty dollars ($250).
(d) When a registration notification form or registration renewal
form is denied or withdrawn, the commissioner shall retain one
hundred fifty dollars ($150) of the fee. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 final
order of the commissioner affecting such person in the same manner
as 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 of
the provisions of this chapter, it is hereby made the duty of the
attorney general of Indiana to render all necessary assistance to the
commissioner upon his request, and to that end the attorney general
shall employ such legal and such other professional services as shall
be necessary to adequately and fully perform such service under the
direction of the commissioner as the demands of the securities
division shall require, and any expenses so incurred by the attorney
general for the purposes aforesaid shall be chargeable against and
paid out of the securities division fund and if such fund is
insufficient for the payment of such expenses and any expenses of
the securities division incident to the administration of this chapter,
then a sufficient sum of money for the payment of any such
deficiency is hereby appropriated annually out of any money
received by the secretary of state as fees for the incorporation and for
the 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 their
individual capacity, except to the state of Indiana, for any act done
or omitted in connection with the performance of their respective
duties 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 granting
power to the secretary of state, the securities division and the
commissioner shall be liberally construed to the end that the practice
or commission of fraud may be prohibited and prevented, disclosure
of sufficient and reliable information in order to afford reasonable
opportunity for the exercise of independent judgment of the persons
involved may be assured, in connection with the issuance, barter,
sale, purchase, transfer or disposition of franchises in this state. It is
the intent and purpose of this chapter to delegate and grant to and
vest in the secretary of state, the securities division and the
commissioner full and complete power to carry into effect and
accomplish the purpose of this chapter and to charge them with full
and 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 information
restricted; copies; destruction
Sec. 48. (a) All registration notification forms, registration
renewal forms, applications to amend registrations, reports, and other
papers and documents filed with the commissioner under this chapter
shall be open to public inspection. The commissioner may publish
any information filed with or obtained by the commissioner. No
provision of this chapter authorizes the commissioner or any of the
commissioner's assistants, clerks, or deputies to disclose any
information withheld from public inspection except among
themselves or when necessary or appropriate in a proceeding or
investigation under this chapter or to other federal or state regulatory
agencies. No provision of this chapter either creates or derogates
from any privilege which exists at common law or otherwise when
documentary or other evidence is sought under a subpoena directed
to the commissioner or any of the commissioner's assistants, clerks,
or deputies.
(b) It is unlawful for the commissioner or any of the
commissioner's assistants, clerks, or deputies to use for personal
benefit any information which is filed with or obtained by the
commissioner and which is not then generally available to the public.
(c) Upon request, and at such reasonable charges as the
commissioner prescribes by rule, the commissioner shall furnish to
any person photostatic or other copies (certified by the commissioner
if certification is requested) of any document which is retained as a
matter of public record, except that the commissioner shall not
charge or collect any fee for photostatic or other copies of any
document furnished to public officers for use in their official
capacity.
(d) The commissioner may destroy any registration notification
forms, together with the files and folders, as useless or obsolete, four
(4) years after the date of registration; provided that a permanent
record shall be maintained of any disciplinary action taken by the
commissioner and of all orders issued under this chapter.
(e) Copies on microfilm or in other form which may be retained
by the commissioner of any records destroyed under this section
shall be accepted for all purposes as equivalent to the original when
certified by the commissioner. (Formerly: Acts 1975, P.L.262, SEC.1.) As amended by
P.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 relieve
corporations or other business organizations from making reports
now 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 be
paid by corporations or other business organizations. This chapter
shall not be construed to repeal any law now in force regulating the
organization of corporations or other business organizations in
Indiana, or the admission of any foreign corporation but the
provisions of this chapter shall be construed to be additional to any
provisions regulating the organization of a corporation or other
business organization under the laws of Indiana, or the admission of
a 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 this
chapter. (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 of
deceased franchisee
Sec. 51. (a) Any designated family member of a deceased service
station franchisee may succeed to the ownership of the existing
agreement if all of the following conditions are met:
(1) The designated family member gives the service station
franchisor written notice of the intention to succeed to the
service station agreement within thirty (30) days of the service
station franchisee's death.
(2) The designated family member agrees to be bound by all
terms and conditions of the existing owner's franchise
agreement.
(3) There is no good cause for the service station franchisor to
refuse to honor the succession.
For purposes of this subsection, the grounds for termination or
nonrenewal of a franchise set out in the federal Petroleum Marketing
Practices Act (15 U.S.C. 2801 et seq.) constitute good cause.
Notification of the refusal must be submitted to the designated family
member in writing within sixty (60) days after the date of the service
station franchisee's death, and must specify the reasons for the
refusal. The form of the written notice required under this subsection
shall be prescribed in the terms of the agreement.
(b) This section does not apply to agreements between franchisors
and service station franchisees entered into or renewed before July
1, 1983. As added by P.L.241-1983, SEC.2.
