ITEM 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES Required purchases You must purchase your pipe bending machine, hoist, cutting torch, mufflers, exhaust pipe, and other supplies under specifications in the operations manual. These specifications include standards for delivery, performance, design, and appearance. Our specifications are formulated by our engineering department and may be modified…
Sample Item 22: Contracts ITEM 22: CONTRACTS The following agreements and other required exhibits are attached to this disclosure document in the pages immediately following: A. Belmont Franchise Agreement B. Belmont Lease of Premises C. USA Credit Corp. Equipment Lease D. Belmont Equipment Purchase Note E. Belmont Initial Fee Loan Agreement F. Belmont Operating Manual…
ITEM 3: LITIGATION Pending Actions Blank v. Belmont Mufflers, Inc., No. 06-111 (M.D. Fla. filed August 1, 2007). Five franchisees filed suit against us for breach of contract, alleging that we failed to furnish equipment in the time period stated in our franchise agreement. These franchisees seek damages of $350,000. A trial is scheduled for…
ITEM 12: TERRITORY You will receive an exclusive territory with a minimum population of 50,000 people. You will operate from one location and must receive our permission before relocating. We will not operate stores or grant franchises for a similar or competitive business within your area. You are not restricted from selling Belmont products and…
Sample Item 15-1: Obligation to Participate in the Actual Operation of the Franchise Business ITEM 15: OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS If you are an individual, you must directly supervise the franchised business on its premises. If you are a corporation, a person who owns at least a 1/3…
ITEM 7: YOUR ESTIMATED INITIAL INVESTMENT (Column 1) Type of expenditure (Column 2) Amount (Column 3) Method of payment (Column 4) When due (Column 5) To whom payment is to be made Initial franchise fee $15,000 (note 1) Lump sum At signing of franchise agreement Belmont Mufflers, Inc. Travel and living expenses while training $2,500…
Table of Contents Item Page 1. The Franchisor and any Parents, Predecessors, and Affiliates 1 2. Business Experience 3 3. Litigation 4 4. Bankruptcy 6 5. Initial Fees 7 6. Other Fees 10 7. Estimated Initial Investment 11 8. Restrictions on Sources of Products and Services 12 9. Franchisee’s Obligations 15 10. Financing 17 20….
ITEM 11: FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING Except as listed below, Belmont is not required to provide you with any assistance. Pre-Opening Assistance Before you open your business, Belmont will: Designate your exclusive territory (Franchise Agreement, Paragraph 2). Assist you in selecting a business site (Franchise Agreement, Paragraph 3). You select your business…
Table No. 1 – Systemwide Outlet Summary Table No. 1 of Item 20 presents the total number of all outlets nationwide – both company owned and franchised – operating at the beginning and at the end of each of the franchisor’s last three fiscal years. This chart should include all outlets that are substantially similar…
ITEM 10: FINANCING Item Financed Source of Financing Source of Financing Amount Financed Term (Yrs) Interest Rate Monthly Payment Prepay Penalty Security Required Liability Upon Default Loss of Legal Right on Default Initial Fee Belmont (note 1) $10,000 10 18% $180 None Personal Guarantee Loss of franchise-unpaid loan Waive notice. Confess judgment Land / Constr…
The Amended Franchise Rule specifies how franchise disclosure documents are to be prepared, what additional information may and may not be included, and what records franchisors must maintain. Disclosure documents must: use “plain English”; be contained within a single document; and address each disclosure item without including additional information. It is recommended that an experienced…
Secretary Of State Fee Schedule For Business Entity Filings The following fees are effective as of the date this Guide was printed. Questions may be directed to the Secretary of State’s office at the address and telephone number provided in the Resource Directory section of this Guide. See note at the end of fee schedule…
Filing Documents With The Secretary Of State Drafting The Document Standard forms are available without charge from the Secretary of State’s website at www.sos.state.mn.us/index.aspx?page=331 or by fax from the Fax Forms library at (651) 296-2803 or by mail from the Secretary of State. While these forms are designed to meet minimum requirements of the law,…
The “Required Payment” Element The last of the three definitional elements of a franchise covered by the amended Rule is that purchasers of the business arrangement must be required to pay to the franchisor (or to an affiliate), as a condition of obtaining a franchise or starting operations, a sum of at least $500 at-5…
A franchise is an agreement or contract between two or more persons by which the franchisor, for a fee, gives the franchisee the right to engage in the business of offering or distributing goods or services using the franchisor’s trade name, trademark, service mark, logotype, advertising, or other commercial symbol. Both the franchisor and the…
Cooperatives A cooperative is a form of business organization in which the business is owned and controlled by those who use its services. A cooperative may be organized as a legal entity or it may be an unincorporated association. Cooperative associations are organized as legal entities under and overned by Minnesota Statutes Chapter 308A. Non-Minnesota…
Professional Entities The Minnesota Professional Firms Act, Minnesota Statutes, Chapter 319B, was enacted in 1997 and authorizes practitioners of certain licensed professions to elect to be professional firms under any one of three different forms of organization: corporations (either for-profit or nonprofit); limited liability companies; and limited liability partnerships. In the absence of the Minnesota…
The “Significant Control or Assistance” Element The amended Rule covers business arrangements where the franchisor “will exert or has the authority to exert a significant degree of control over the franchisee’s method of operation, or provide significant assistance in the franchisee’s method of operation.” When Is Control or Assistance Significant? The more franchisees reasonably rely…
Special Types Of Business Organizations S Corporations Professional Entities Nonprofit Corporations Cooperatives Franchises S Corporations Both “S” and “C” corporations are created by filing articles of incorporation with the Secretary of State, after which the shareholders must decide whether to treat the corporation as an S corporation or as a C corporation for tax purposes….
Foreign LLCs Doing Business In Minnesota A limited liability company that is organized under the laws of a state other than Minnesota that transacts business in Minnesota must obtain a certificate of authority before doing business in Minnesota. The requirements for obtaining the certificate of authority are specified by Minnesota Statutes § 322B.90 to 322B.955,…
Entrepreneurs and small business owners often ask me when they should use an attorney. Business owners are often successful because they are frugal, so it follows that they would be especially cautious when hiring a lawyer. For a small business, it is important to keep overhead low; this includes legal fees. However, preventing problems is…
Post-Organization Issues General Considerations After the limited liability company is formed, it must perform certain start-up tasks, such as obtaining federal and state tax identification numbers, obtaining an unemployment compensation identification number, setting up and maintaining the books and records of the business, calling and conducting the initial meeting of the board of governors or…
Amending Articles of Organization A limited liability company may amend its articles of organization to include or modify any provision that is required or permitted to appear in the articles or to omit any provision not required to be included. Amendments are required when any changes are made in the articles of organization. The amendment…
The “Trademark” Element A franchise entails the right to operate a business that is “identified or associated with the franchisor’s trademark, or to offer, sell, or distribute goods, services, or commodities that are identified or associated with the franchisor’s trademark.” The term “trademark” is intended to be read broadly to cover not only trademarks, but…
Articles Of Organization A limited liability company is formed by filing articles of organization with the Secretary of State and paying the filing fee. Minimum requirements for the articles of organization are provided on an articles of organization form that is available from the Secretary of State’s website at www.sos.state.mn.us/index.aspx?page=331 or by fax from the…
Starting a MN Business Understanding the formation of each entity type is an important step in deciding which business entity type is right for you. Over the course of several articles, we’ll look at the formation and logistics of various types of business entities. The information provided is intended to help you in the process…
Forming A Minnesota Limited Liability Company This series of posts will discuss the necessary steps to forming a LLC in Minnesota. Some of the processes and considerations involved in forming a limited liability corporation in Minnesota include: Filing Articles of Organization naming the business entity Registering an office Registering an agent Listing the organizers Other…
Subsidiaries When a corporation extends into a new product line or a new geographic area, it frequently establishes a “subsidiary” corporation. A subsidiary corporation is a separate legal entity which happens to be controlled by another corporation (its “parent”) that owns enough shares of the subsidiary’s stock to dictate policy. Some subsidiaries are wholly-owned, some…
Do you need to have a disclosure at the end of your emails? Most people don’t. However, certain professions (like lawyers) may help protect themselves by having an email disclosure. Email disclosures don’t have to be long and filled with a lot of legalese. However, sometimes lawyers may prefer that to make them sound more…
Amending the Articles of Incorporation A corporation may amend its articles of incorporation to include or modify any provision that is required or permitted to appear in the articles or to omit any provision not required to be included in the articles. Amendments are required when any changes are made in the articles of incorporation….