3.2.11 Michigan

Fees

*Renewal filings must be submitted prior to the current registration’s expiration or Michigan may require the submission of a statement of no sales for the period where registration lapsed.

Notes

• The filing fee for initial filings must be made via check made payable to “State of Michigan”.
• We will draft a letter providing notice to the state that you intend to sell franchises there and providing a description of the concept.
• Michigan filings do not require submission of the FDD and the filing is typically approved within a couple of weeks.

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

• Fractional Franchises – exemption from registration only
  • Where transaction involves an experienced businessperson who is adding a franchise to an existing business operation, and the following criteria must be met:
    • Must be engaged in a business operation of which the franchise will become a part or segment
    • Individual who will operate or manage the franchise must have at least two years of experience in the same type of business as the franchise
    • Parties involved at time of sale must have reasonable grounds to believe additional gross sales of new franchise will not exceed 20% of the overall gross sales of franchisee’s combined business operations
  • No filing or fees are required
• Sales to Existing Franchisees – exemption from registration only
  • Selling to one of its existing franchisees as long as franchisee has been actively operating franchise for the past 18 months and is not purchasing solely for resale
  • No filing or fees are required
• Renewal of an Existing Agreement – exemption from registration only
  • Where transaction is renewing or modifying a franchise agreement where there was no interruption in the operation of the franchised business and no material change in the relationship
  • No filing or fees are required
• Sales by Existing Franchisees – exemption from registration only
  • Franchisee engages in sale of its existing franchise for its own account
    • Must be an isolated sale not part of a distribution plan
    • Does not include situations where you require the buyer to sign your “then-current” franchise agreement rather than the buyer signing the already “existing franchise (agreement)”
  • No filing or fees are required
• Sales by Executor, Trustee, Etc. – exemption from registration only
  • Sale or offering by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator
  • No filing or fees are required
• Sales by Bank – exemption from registration only
  • Offer or sale to a bank, savings institution, trust company, insurance company, investment company, or other financial institution, association, or institutional buyer or to a broker-dealer where purchaser is acting for itself or in fiduciary capacity
  • No filing or fees are required
• Out-of-State Sales – exemption from registration only
  • Where the offer or sale is for a franchise that will not be operated in Michigan and where the buyer is not domiciled in Michigan
  • 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
  • Leased Department
  • Co-Ops