3.2.19 South Dakota

Fees

*Renewal filings must be submitted before the expiration date or South Dakota may require the filing be resubmitted as a new initial filing with payment of the initial fee.

**South Dakota does not require the submission of amendment filings.

Notes

• The preferred method for filing in South Dakota is through an online portal created by the industry for registration states. The filing fees are also paid through the portal via ACH.  You will be required to complete and submit an ACH authorization form to us before we will submit the filing for you.  Transaction fees apply for each filing with the current rate being $100 per filing.
• South Dakota will accept unaudited financials in lieu of an audit (in your FDD) from first-year startup franchisors.
• No deals may be closed in South Dakota until the initial or renewal filing is approved, and all South Dakota prospects must be disclosed/redisclosed with the approved FDD.

Exemptions (from registration with the state and/or from disclosure with a specific prospect)

• Large Franchisee – exemption from registration and disclosure
  • If franchisee or its parent or any affiliate is an entity that has been in business for at least five years and has a minimum net worth of $5,000,000
  • No filing or fees are required
• Large Investment – exemption from registration and disclosure
  • Where franchisee’s initial investment is at least $1,000,000 (excluding the cost of unimproved land and any financing you may provide as franchisor) and the prospective franchisee signs an acknowledgement to verify the basis for the exemption
  • No filing or fees are required
• Fractional Franchises – exemption from registration only
  • Franchisee (or any of its current directors or officers, or of its parent or affiliate) has more than two years of experience in same type of business as franchise offered and both you and the franchisee have reasonable basis to anticipate that sales arising from the franchise will not exceed 20% of the franchisee’s revenue during first year
  • No filing or fees are required
• Insiders – exemption from registration and disclosure
  • If one or more purchasers of at least a 50% ownership interest in franchise, within 60 days of franchise sale, has been, for at least two years:
    • either an offer, director, general partner, individual with management responsibility for offer and sale of your franchises or the administrator of your franchise network; or
    • an owner of at least a 25% ownership interest in you
  • No filing or fees are required
• Sales to Existing Franchisees – exemption from registration only
  • Where the additional franchise is substantially the same as the franchise that the franchisee has operated for at least two years at time of offer or sale
  • No filing or fees are required
• Renewal of an Existing Agreement – exemption from registration and disclosure
  • Where an existing franchise is being extended or renewed and:
    • there has been no interruption in the operation of the business
    • the terms of the extension or renewal do not differ materially from original agreement
  • No filing or fees are required
• Sales by Existing Franchisees – exemption from registration and disclosure
  • Where you have had no significant involvement with the buyer
  • No filing or fees are required
• Sales by Executor, Trustee, Etc. – exemption from registration and disclosure
  • Where the offer or sale of a franchise is being made by a personal representative, sheriff, marshal, receiver, trustee, guardian, or conservator on behalf of a person other than you
  • No filing or fees are required
• Sales to Bank – exemption from registration only
  • Where the offer or sale is to a bank, savings and loan association, financial organization, or life insurance corporation
  • No filing or fees are required
• Out-of-State Sales – exemption from registration and disclosure
  • Where the offer or sale is made to a non-resident of South Dakota, the franchised business will not be located in South Dakota, and the offer or sale does not violate the laws of the jurisdiction in which the prospective franchisee is located
  • No filing or fees are required
• Non-Franchisor Exemptions – The following exemptions are for atypical franchise offerings, are very rare, and in general, will not apply to you if you are an active franchisor with an FDD.
  • Nominal Fee
  • Oral Franchise
  • Leased Department
  • By Order
  • Vehicle Franchises
  • Petroleum Franchises