1995 Wisconsin Act 364

553.03 (8g) “Notification" means notification under s. 553.26.

364,3 Section 3 . 553.03 (10) of the statutes is repealed.

364,4 Section 4 . 553.21 (1) of the statutes is renumbered 553.21 and amended to read:

553.21 Registration requirement. No person may sell or offer in this state any franchise unless the offer of the franchise has been registered under this chapter or is exempted under s. 553.22, 553.23, 553.235 or 553.25.

364,5 Section 5 . 553.21 (2) of the statutes is repealed.

364,6 Section 6 . 553.22 of the statutes, as affected by 1995 Wisconsin Act 27, is repealed and recreated to read:

553.22 Excluded franchises. This chapter does not apply to the offer or sale of the following franchises:

(1) Any relationship if the person described in the offer as a franchisee, or any of the current directors or executive officers of that person, has been in the type of business of the franchise relationship for more than 2 years and the parties anticipated, or should have anticipated, at the time the agreement establishing the franchise relationship was reached, that the sales arising from the relationship would account for no more than 20% of the gross sales revenue of the franchisee for a period of at least one year after the franchisee begins selling the goods or services involved in the franchise.

(2) An association of producers of agricultural products authorized by 7 USC 291.

(3) An organization that is operated on a cooperative basis by and for independent retailers and that sells goods at wholesale to, or furnishes services primarily to, its members.

364,7 Section 7. 553.23 of the statutes is amended to read:

553.23 Private franchisee and subfranchisor sales exempted. The offer or sale of a franchise by a franchisee for the franchisee's own account or and the offer or sale of the entire area franchise owned by a subfranchisor for the subfranchisor's own account is are exempted from s. 553.21 if the sale is not effected by or through a franchisor. A sale is not effected by or through a franchisor merely because a franchisor has a right to approve or disapprove a different franchisee or because a franchisor imposes or has the right to impose a fee or charge to reimburse the franchisor for reasonable and actual expenses incurred in connection with the sale.

364,8 Section 8 . 553.235 (1) (intro.) of the statutes is amended to read:

553.235 (1) Conditions of exemption. (intro.) Except as provided in sub. (2), a registration exemption is available for the offer or sale of a franchise that meets all of the following conditions:

364,9 Section 9 . 553.235 (2) (a) of the statutes is amended to read:

553.235 (2) (a) The exemption under sub. (1) is not available for the offer or sale of a franchise in which the franchisee would be a motor vehicle dealer or a motor vehicle distributor or wholesaler, as defined in s. 218.01 (1).

364,10 Section 10 . 553.24 (1) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.24 (1) The division may by order deny or revoke any exemption under s. 553.22, 553.23, 553.235 or 553.25 with respect to the offer or sale of a franchise for any of the grounds specified in s. 553.28 (1).

364,11 Section 11 . 553.24 (2) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.24 (2) If the public interest and the protection of investors so require, the division may, by order, summarily deny or revoke any exemption under s. 553.22, 553.23, 553.235 or 553.25 with respect to the offer or sale of a franchise.

364,12 Section 12 . 553.24 (4) (intro.) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.24 (4) (intro.) A person who offers or sells a franchise pursuant to an exemption under s. 553.22, 553.23, 553.235 or 553.25 after the exemption is denied or revoked by an order of the division does not violate s. 553.21 if:

364,13 Section 13 . 553.24 (6) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.24 (6) Within 10 days after the filing date of the information required under s. 553.22 or an application for an exemption under s. 553.25, the division may require that additional information be filed if the division determines that the information is reasonably necessary to establish an exemption under s. 553.22 or 553.25. If the division requires additional information, the exemption is not effective until 10 days after the additional information is filed with the division, unless a shorter period is permitted by the division.

364,14 Section 14 . 553.25 of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.25 Exemption by division. The division may by rule or order exempt from registration under s. 553.21 any offer or sale of a franchise if registration is not necessary or appropriate in the public interest or for the protection of investors.

364,15 Section 15 . 553.26 (title) of the statutes is amended to read:

553.26 (title) Application for registration Registration by notification.

364,16 Section 16 . 553.26 (intro.) of the statutes is repealed.

364,17 Section 17 . 553.26 (1) to (3) of the statutes are repealed and recreated to read:

553.26 (1) A person who wishes to sell a franchise in this state that is not excluded under s. 553.22 and that is not exempt from registration under s. 553.23, 553.235 or 553.25 shall register the franchise by notification to the division. The notification shall be on a notice form prescribed by the division, which need include only the name of the franchisor or subfranchisor, the name or names under which the franchisor or subfranchisor intends to do business and the franchisor's or subfranchisor's principal business address. Nothing other than a copy of the offering circular required under s. 553.27(4), the consent to service of process required by s. 553.27 (10), if it is not already on file with the division, and the registration fee required under s. 553.72 (1) need accompany the notification.

(2) A franchisor may register only one franchise system on each notification.

(3) Registration is effective upon receipt of the notification by the division. The notice shall be effective for one year from the date on which the division receives it.

364,18 Section 18 . 553.26 (4) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed and recreated to read:

553.26 (4) Upon receipt of notification, the division shall endorse upon the notice form “received" and the date and shall return a copy to the person who filed the notice form.

364,19 Section 19 . 553.26 (4m) of the statutes is created to read:

553.26 (4m) A person who has complied with sub. (1) need not file with the division, during the period when the registration is effective, any more information, including any amendments to the offering circular. The division may not require changes in the offering circular filed by the franchisor, subject to the division's authority to suspend or revoke a registration for any of the causes under s. 553.28.

364,20 Section 20 . 553.26 (5) and (6) of the statutes are repealed.

364,21 Section 21. 553.26 (7) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,22 Section 22 . 553.26 (8) to (17) of the statutes are repealed.

364,23 Section 23 . 553.26 (18) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,24 Section 24 . 553.26 (19) of the statutes is repealed.

364,25 Section 25 . 553.26 (20) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,26 Section 26 . 553.26 (21) of the statutes is repealed.

364,27 Section 27 . 553.26 (22) of the statutes is repealed.

364,28 Section 28 . 553.27 (title) of the statutes is amended to read:

553.27 (title) General registration provisions; offering circular; consent to service of process.

364,29 Section 29 . 553.27 (1) of the statutes is repealed.

364,29t Section 29t. 553.27 (2) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.27 (2) If the division finds that the applicant 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 if the franchisee so requests, the division may by rule or order require the escrow of franchise fees and other funds paid by the franchisee or subfranchisor until no later than the time of opening of the franchise business, or, at the option of the franchisor, the furnishing of a surety bond as provided by rule of the division, if the division finds that such requirement is necessary and appropriate to protect prospective franchisees or subfranchisors.

364,30 Section 30. 553.27 (3) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,31 Section 31 . 553.27 (4) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.27 (4) No franchise subject to registration under this chapter may be sold in this state unless a copy of the an offering circular in the form prescribed by rule of the division is provided to the prospective franchisee at least 10 business days prior to the execution by the prospective franchisee of any binding franchise or other agreement or at least 10 business days prior to the receipt of any consideration, whichever first occurs. The offering circular may be in a form that the division requires by rule, in a form permitted under 16 CFR 436 or in a form permitted by a successor to that regulation.

364,32 Section 32 . 553.27 (5) of the statutes is repealed.

364,33 Section 33 . 553.27 (6) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,34 Section 34 . 553.27 (7) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,35 Section 35 . 553.27 (8) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,36 Section 36 . 553.27 (9) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,37 Section 37 . 553.27 (10) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.27 (10) Every applicant for registration of an offer to sell franchises under this chapter franchisor who files a notification shall file with the division, in such the form as that the division by rule prescribes, an irrevocable consent appointing the division to be the applicant's attorney to receive service of any lawful process in any civil action against the applicant or the applicant's successor, executor or administrator, which that arises under this chapter or any rule or order under this chapter after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. A person who has filed a consent in connection with a previous registration or exemption under this chapter need not file another. Service may be made by leaving a copy of the process in the office of the division but it is not effective unless the plaintiff, who may be the division in an action instituted by the division, forthwith sends notice of the service and a copy of the process by registered or certified mail to the defendant or respondent at his or her last address on file with the division, and the plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return day of the process, if any, or within such further the time as that the court allows.

364,38 Section 38 . 553.27 (11) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,39 Section 39 . 553.28 (title) of the statutes is amended to read:

553.28 (title) Denial, suspension or revocation of registrations or exemptions.

364,40 Section 40 . 553.28 (1) (intro.) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.28 (1) (intro.) The division may issue an order denying effectiveness to, or postponing, suspending or revoking the effectiveness of, any registration statement if the division finds any of the following:

364,41e Section 41e. 553.28 (1) (a) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed and recreated to read:

553.28 (1) (a) That the franchisor or any person acting on behalf of the franchisor failed to provide an offering circular to a person purchasing a franchise in this state within the time period prescribed in s. 553.27 (4).

364,41m Section 41m. 553.28 (1) (b) of the statutes is repealed and recreated to read:

553.28 (1) (b) That any person in this state was sold a franchise by means of any written or oral communication that contained an untrue statement of a material fact, or that omitted to state a material fact necessary in order to make statements made, in the light of the circumstances under which they were made, not misleading.

364,41s Section 41s. 553.28 (1) (c) of the statutes is repealed.

364,42 Section 42. 553.28 (1) (d) of the statutes is amended to read:

553.28 (1) (d) That any person identified in an application for registration the franchisor's offering circular has been convicted of an offense specified under s. 553.26 (5) that is required to be disclosed in the offering circular, or is subject to an order, or has had a civil judgment entered against him or her as described in s. 553.26 (5) that is required to be disclosed in the offering circular, and the involvement of the person in the same sale or management of the franchise creates an unreasonable risk to prospective franchisees.

364,43 Section 43 . 553.28 (1) (e) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.28 (1) (e) That the applicant or registrant franchisor has failed to pay the proper filing fee;, but the division may enter only a denial order under this paragraph and the division shall vacate any such order when the deficiency has been corrected.

364,44 Section 44 . 553.28 (1) (f), (g) and (h) of the statutes are repealed.

364,45 Section 45 . 553.28 (2) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.28 (2) If the public interest and the protection of investors so require, the division may by order summarily deny, postpone, suspend or revoke the effectiveness of the registration.

364,46 Section 46 . 553.29 of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,47 Section 47 . 553.30 of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

364,50 Section 50 . 553.41 (3) of the statutes is amended to read:

553.41 (3) No person may offer, purchase or sell a franchise in this state by means of any written or oral communication not included in sub. (1) which (4) that includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

364,51 Section 51 . 553.41 (4) of the statutes is amended to read:

553.41 (4) No person may make any untrue statement of a material fact in any statement required to be disclosed in writing in a timely manner pursuant to s. 553.22 or under s. 553.27 or omit to state in any such statement any material fact which that is required to be stated therein in the statement.

364,52 Section 52 . 553.41 (5) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

553.41 (5) No person may wilfully represent to any prospective purchaser or seller of a franchise franchisee in this state that the filing of a franchise registration application or the registration of a franchise constitutes a finding by the division that any document filed under this chapter is true, complete, and not misleading, or in relation to an exemption or exception, that the division has passed in any way upon the merits of any franchise or wilfully represent in a similar manner that a franchise is registered or exempted when in fact, such that is not the case.

364,53 Section 53 . 553.51 (title) of the statutes is amended to read:

553.51 (title) Civil liability; offer or sale in violation.

364,54 Section 54 . 553.51 (1) of the statutes is amended to read:

553.51 (1) Any person who offers, purchases or sells a franchise in violation of s. 553.21 or 553.41 (1), (2), (4) or (5) 553.27 (4), if the violation was material in the franchisee's or subfranchisor's decision to purchase the franchise, shall be liable to the franchisee or subfranchisor, who may bring an action for rescission, unless, in the case of a violation of s. 553.41 (1), (2), (4) or (5), the defendant proves that the plaintiff knew the facts concerning the untruth or omission, or that the defendant exercised reasonable care and did not know, or, if the defendant had exercised reasonable care, would not have known, of the untruth or omission.