AB782: Bill Text

LRB-4451/4

JS:kmg:km

1995 - 1996 LEGISLATURE

1995 Assembly BILL 782

January 11, 1996 - Introduced by Representatives Jensen, Albers, Green, Hoven, Ladwig, Hahn, Springer, Grothman and Seratti, cosponsored by Senators Darling, Huelsman and Fitzgerald. Referred to Committee on Insurance, Securities and Corporate Policy.

AB782,1,15 An Act to repeal 553.03 (1) and (8m), 553.03 (10), 553.21 (2), 553.26 (intro.), 553.26 (5) and (6), 553.26 (7), 553.26 (8) to (17), 553.26 (18), 553.26 (19), 553.26 (20), 553.26 (21), 553.26 (22), 553.27 (1), 553.27 (2) and (3), 553.27 (5), 553.27 (6), 553.27 (7), 553.27 (8), 553.27 (9), 553.27 (11), 553.28 (1) (f), 553.29, 553.30, 553.31, 553.53, 553.58 (3), 553.72 (2), 553.74 (2) and 553.76 (2); to renumber and amend 553.21 (1), 553.74 (1) and 553.76 (1); to amend 553.23, 553.235 (1) (intro.), 553.235 (2) (a), 553.24 (1), 553.24 (2), 553.24 (4) (intro.), 553.24 (6), 553.25, 553.26 (title), 553.27 (title), 553.27 (4), 553.27 (10), 553.28 (title), 553.28 (1) (intro.), 553.28 (1) (b), 553.28 (1) (d), 553.28 (1) (e), 553.28 (2), 553.41 (1), 553.41 (3), 553.41 (4), 553.41 (5), 553.51 (title), 553.51 (1), 553.51 (2), 553.51 (4), 553.52 (1), 553.52 (2), 553.56 (1), 553.58 (1), 553.59, 553.60, 553.605 (1) (a) (intro.), 553.72 (1) and 553.75 (3); to repeal and recreate 553.22, 553.26 (1) to (3) and 553.26 (4); and to create 553.03 (8g) and 553.26 (4m) of the statutes; relating to: the regulation of sales of franchises and granting rule-making authority.

Analysis by the Legislative Reference Bureau

This bill makes many changes to the franchise investment law. The major change is to replace the current registration system with a requirement that a notice of registration of the franchise be filed. Other changes include discontinuing the requirement that advertisements of the franchise be filed with the division of securities and creating a statute of limitation of one year after discovery of a violation.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB782, s. 1 Section 1. 553.03 (1) and (8m) of the statutes are repealed.

AB782, s. 2 Section 2. 553.03 (8g) of the statutes is created to read:

AB782,2,3 553.03 (8g) "Notification" means notification under s. 553.26.

AB782, s. 3 Section 3. 553.03 (10) of the statutes is repealed.

AB782, s. 4 Section 4. 553.21 (1) of the statutes is renumbered 553.21 and amended to read:

AB782,2,9 553.21 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.

AB782, s. 5 Section 5. 553.21 (2) of the statutes is repealed.

AB782, s. 6 Section 6. 553.22 of the statutes, as affected by 1995 Wisconsin Act 27, is repealed and recreated to read:

AB782,2,14 553.22 Excluded franchises. This chapter does not apply to the offer or sale of the following franchises:

AB782,3,3 (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.

AB782,3,5 (2) An association of producers of agricultural products authorized by 7 USC 291 (1).

AB782,3,8 (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.

AB782, s. 7 Section 7. 553.23 of the statutes is amended to read:

AB782,3,17 553.23 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.

AB782, s. 8 Section 8. 553.235 (1) (intro.) of the statutes is amended to read:

AB782,3,21 553.235 (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:

AB782, s. 9 Section 9. 553.235 (2) (a) of the statutes is amended to read:

AB782,3,25 553.235 (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).

AB782, s. 10 Section 10. 553.24 (1) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB782,4,5 553.24 (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).

AB782, s. 11 Section 11. 553.24 (2) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB782,4,10 553.24 (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.

AB782, s. 12 Section 12. 553.24 (4) (intro.) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB782,4,15 553.24 (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:

AB782, s. 13 Section 13. 553.24 (6) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB782,4,24 553.24 (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.

AB782, s. 14 Section 14. 553.25 of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB782,5,5 553.25 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.

AB782, s. 15 Section 15. 553.26 (title) of the statutes is amended to read:

AB782,5,7 553.26 (title) Application for registration Registration by notification.

AB782, s. 16 Section 16. 553.26 (intro.) of the statutes is repealed.

AB782, s. 17 Section 17. 553.26 (1) to (3) of the statutes are repealed and recreated to read:

AB782,5,19 553.26 (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 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.

AB782,5,20 (2) A franchisor may register only one franchise system on each notification.

AB782,5,22 (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.

AB782, s. 18 Section 18. 553.26 (4) of the statutes, as affected by 1995 Wisconsin Act 27, is repealed and recreated to read:

AB782,6,3 553.26 (4) Upon receipt of notification, the division shall endorse upon the notice "received" and the date and shall return a copy to the person who filed the notice.

AB782, s. 19 Section 19. 553.26 (4m) of the statutes is created to read:

AB782,6,8 553.26 (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 review the offering circular for the adequacy of its disclosure.