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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1988 

                        CHAPTER 561-S.F.No. 2347 
           An act relating to commerce; regulating franchises; 
          modifying the definition of franchise to include 
          certain royalty or residuals agreements; regulating 
          burglar alarm franchises; amending Minnesota Statutes 
          1986, section 80C.01, subdivision 4; proposing coding 
          for new law in Minnesota Statutes, chapter 80C.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1986, section 80C.01, 
subdivision 4, is amended to read:  
    Subd. 4.  "Franchise" means (a) a contract or agreement, 
either express or implied, whether oral or written, for a 
definite or indefinite period, between two or more persons: 
    (1) by which a franchisee is granted 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 or related 
characteristics; 
    (2) in which the franchisor and franchisee have a community 
of interest in the marketing of goods or services at wholesale, 
retail, by lease, agreement, or otherwise; and 
    (3) for which the franchisee pays, directly or indirectly, 
a franchise fee; or 
    (b) a contract, lease, or other agreement, either express 
or implied, whether oral or written, for a definite or 
indefinite period, between two or more persons, whereby the 
franchisee is granted the right to market motor vehicle fuel; or 
    (c) the sale or lease of any products, equipment, chattels, 
supplies, or services to the purchaser, other than the sale of 
sales demonstration equipment, materials or samples for a total 
price of $500 or less to any one person, for the purpose of 
enabling the purchaser to start a business and in which the 
seller:  
    (1) represents that the seller, lessor, or an affiliate 
thereof will provide locations or assist the purchaser in 
finding locations for the use or operation of vending machines, 
racks, display cases, or similar devices, or currency operated 
amusement machines or devices, on premises neither owned or 
leased by the purchaser or seller; or 
    (2) represents that the seller will purchase any or all 
products made, produced, fabricated, grown, bred, or modified by 
the purchaser using, in whole or in part, the supplies, 
services, or chattels sold to the purchaser; or 
    (3) guarantees that the purchaser will derive income from 
the business which exceeds the price paid to the seller.; or 
    (d) an oral or written contract or agreement, either 
expressed or implied, for a definite or indefinite period, 
between two or more persons, under which a manufacturer, selling 
security systems through dealers or distributors in this state, 
requires regular payments from the distributor or dealer as 
royalties or residuals for products purchased and paid for by 
the dealer or distributor.  
    (e) "Franchise" does not include any business which is 
operated under a lease or license on the premises of the lessor 
or licensor as long as such business is incidental to the 
business conducted by the lessor or licensor on such premises, 
including, without limitation, leased departments, licensed 
departments, and concessions. 
    (e) (f) "Franchise" does not include any contract, lease or 
other agreement whereby the franchisee is required to pay less 
than $100 on an annual basis, except those franchises identified 
in paragraph (b). 
    (f) (g) "Franchise" does not include a contract, lease or 
other agreement between a new motor vehicle manufacturer, 
distributor, or factory branch and a franchisee whereby the 
franchisee is granted the right to market automobiles, 
motorcycles, trucks, truck tractors, or self-propelled motor 
homes or campers if the foregoing are designed primarily for the 
transportation of persons or property on public highways. 
     Sec. 2.  [80C.30] [BURGLAR ALARM FRANCHISES.] 
     A manufacturer of a burglar alarm product having been sold 
to a distributor in this state for at least five years may 
establish itself as a franchisor as provided in this section.  
Such franchisor may require a distributor to begin paying an 
annual franchise fee and/or a sign up fee for operations within 
this state provided the manufacturer gives an existing 
nonfranchised distributor ten years notice of intent to 
establish a franchisor/franchisee relationship and grants an 
automatic extension of the existing distributor contractual 
arrangement during the notice period.  The manufacturer may not 
establish any business in this state in competition with the 
distributor during the notice period.  A manufacturer 
terminating an existing burglar alarm distributor contract in 
this state must wait ten years before opening a distributorship 
in this state. 
    Approved April 18, 1988