Title 37 — TRADE REGULATION

Terms used in this chapter, unless the context otherwise requires, mean: (1) "Action," any complaint, cross claim, counterclaim, and third-party complaint in a judicial action or proceeding, and their equivalent in an administrative action or arbitration; (2) "Affiliate," any ent…

This chapter does not prevent the negotiation of the terms and conditions of a franchise before it is sold. After the initial offer, a franchisor need not amend its disclosure document to negotiate with an offeree, or make supplementary disclosure to that offeree, by reason of a …

The person offering or selling any franchise subject to the requirements of §§ 37-5B-17 and 37-5B-18 shall obtain a receipt, signed by the prospective franchisee, acknowledging that the prospective franchisee has received a copy of the disclosure document prior to the prospective…

The following are exempt from this chapter: (1) Any franchise relationship covered by the Petroleum Marketing Practices Act, 15 U.S.C. 2801, as of January 1, 2008; (2) Any franchise relationship where there is no written document that describes any material term or aspect of the …

The following franchises are subject to this chapter but are exempt from §§ 37-5B-4 and 37-5B-17 , if any of the following conditions are satisfied: (1) The franchisee's initial investment, excluding any financing received from the franchisor or an affiliate, and excluding the co…

The following franchises are subject to this chapter but are exempt from § 37-5B-4 if any of the following conditions are satisfied: (1) The offer or sale to an existing franchisee of an additional franchise that is substantially the same as the franchise that the franchisee has …

The director may by rule or order exclude the offer and sale of a franchise from the requirements of §§ 37-5B-4 and 37-5B-17 if the filing or disclosure is not necessary or appropriate in the public interest or for the protection of prospective franchisees. Source: SL 2008, ch 20…

For purposes of the exemptions set forth in subdivision 37-5B-12(5) and subdivisions 37-5B-13(1) and (2), the director may adjust by rule or order the size of the thresholds. Source: SL 2008, ch 203 , § 16.

In connection with the offer or sale of a franchise in this state, unless the transaction is exempted by the provisions of §§ 37-5B-12 to 37-5B-16 , inclusive, it is a prohibited practice and a violation of this chapter for any person, directly or indirectly, to: (1) Fail to furn…

For purposes of subdivisions 37-5B-17(1) and (2), the franchisor has furnished the disclosure documents by the required date if: (1) A copy of the disclosure document was hand-delivered, faxed, e-mailed, or otherwise delivered to the prospective franchisee by the required date; (…

Every franchisor offering or selling a franchise in this state shall maintain complete and accurate books and records of the offers and sales of franchises. The books and records shall include all of the disclosure documents and advertising and correspondence that have been used …

This chapter applies to any franchise that is offered or sold in this state. A franchise is offered in this state if: (1) An offer to sell is made in this state; (2) The offer originates from within this state; or (3) The offer is directed by the offeror into this state from outs…

In any proceeding under this chapter the burden of proving an exemption is upon the person claiming it. Source: SL 2008, ch 203 , § 20.

A written provision in a franchise contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of the contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to a…

Each applicant for notice filing under this chapter, and each franchisor on whose behalf an application for notice filing is filed, except any applicant and franchisor which are domestic South Dakota entities, shall file with the director an irrevocable consent to service of proc…

No person may publish or cause to be published in this state any advertisement concerning any franchise after the director has found that the advertisement contains any statement that is false or misleading or omits to make any statement necessary in order to make the statements …

No person may, directly or indirectly, employ a device, scheme, or artifice to defraud in connection with the offer or sale of a franchise. A violation of this section is a fraudulent practice and a Class 4 felony. Source: SL 2008, ch 203 , § 24.

No person may, directly or indirectly, in connection with the offer or sale of a franchise willfully: (1) Make an untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they …

No person may, directly or indirectly, in connection with the offer or sale of a franchise: (1) Make any claim or representation, orally, visually, or in writing, that contradicts the information required to be in the disclosure document; (2) Misrepresent that any person: (a) Pur…

The director may not approve or express any opinion on the legality of any matter a franchisor may be required to disclose under this chapter. Source: SL 2008, ch 203 , § 27.

The director shall administer this chapter. Source: SL 2008, ch 203 , § 28.

The director may promulgate rules pursuant to chapter 1-26 to carry out the provisions of this chapter including forms governing disclosure documents, applications, financial statements, and defining any terms, whether or not used in this chapter, if the definitions are not incon…

An offer to sell is not made in this state solely because the offer appears in a newspaper or other publication of general and regular circulation which had more than two-thirds of its circulation outside this state during the past twelve months or solely because the offer appear…

The director may, upon request and upon payment of a fee of fifty dollars, respond to requests for interpretive opinions relating to this chapter. Source: SL 2008, ch 203 , § 30.

A document is filed when it is received by the director. Source: SL 2008, ch 203 , § 31.

The director shall maintain a record which shows the notice filed franchise and for whom filed, and shall specify the conditions, limitations, and restrictions upon the filing, if any, or shall make proper reference to a formal order of the director on file showing the conditions…

Each application, notice and report filed with the director under this chapter is open to public inspection in accordance with rules prescribed by the director. The director may publish information filed with the director or obtained by the director, if, in the judgment of the di…

The director shall upon request furnish copies to any person, at a reasonable charge, certified under the director's seal of office if certification is requested, of any notice filing, application and order on file in the director's office. Any copy so certified is admissible in …

The director may make such public or private investigations within or outside of this state as the director deems necessary to determine if any person has violated or is about to violate any rule, order, or provision under this chapter or to aid in the enforcement of this chapter…

The director may make a written request to any person for information concerning any investigation being conducted by the director. Failure to respond fully and completely to such a request within fifteen days after receipt thereof constitutes cause for the issuance of a cease an…

For the purpose of any investigation or proceeding under this chapter, the director or any person designated by the director may administer oaths and affirmations, subpoena witnesses and compel their attendance, take evidence and require the production of any books, papers, corre…

No person is excused from attending and testifying or from producing any document or record before the director, in obedience to a subpoena of the director or any person designated by the director in any proceeding instituted by the director, on the grounds that the testimony or …

It is a Class 2 misdemeanor for the director or any of the director's officers or employees to use for personal benefit any information which is filed with or obtained by the director and which is not generally available to the public. Nothing in this chapter authorizes the direc…

It is unlawful for any person to offer or sell a franchise in this state unless the franchise has properly notice filed under this chapter or is exempt from notice filing pursuant to §§ 37-5B-12 to 37-5B-15 , inclusive. Source: SL 2008, ch 203 , § 4.

To encourage uniformity in franchise matters among the federal government, self-regulatory organizations, states and foreign governments, the director may cooperate with federal, state or foreign agencies or administrators and law enforcement agencies, including: (1) Conducting j…

The director, with or without prior notice or hearing, may issue a cease and desist order and may issue an order denying, suspending, or revoking any notice filing, amendment, or exemption if the director finds: (1) That the applicant, or franchisor or any officer, director, agen…

As an alternative to the procedure prescribed in § 37-5B-41 , the director may issue an order to show cause setting a hearing and requiring an applicant, notice filer, franchisor, or other person to appear and show cause why a cease and desist order should not be issued, or why a…

The director may impose a civil penalty against a person named in an order issued pursuant to subdivisions (1) to (3), inclusive, and subdivision 37-5B-41(6). The amount of the civil penalty may not exceed five thousand dollars for each act or omission that constitutes the basis …

Upon the entry of an order pursuant to § 37-5B-41 without a hearing, the director of the Division of Insurance shall promptly serve a copy of the order upon the subject applicant, franchisor, or other person. The order shall state the reasons for its issuance and shall either ord…

If no hearing is requested and none is ordered by the director, an order entered pursuant to § 37-5B-41 without a hearing shall remain in effect until it is modified or vacated by the director. Source: SL 2008, ch 203 , § 45.

If a hearing is requested or ordered, the director, after notice and hearing held in accordance with chapter 1-26 shall affirm, modify, or vacate the order. Source: SL 2008, ch 203 , § 46.

If the director has reasonable cause to believe that any person has engaged or is about to engage in any act or practice constituting a violation of any provision of this chapter or any rule or order thereunder, the director may, in addition to all other remedies, through the att…

In addition to all other penalties and remedies provided by this chapter, whether administrative or judicial in nature, the courts of this state have jurisdiction to grant such temporary or permanent injunctive relief as is necessary to prevent and restrain violations of this cha…

A person who violates any provision of this chapter or any rule or order thereunder is liable to the franchisee for actual damages, costs, and attorneys and experts fees. In the case of a violation of §§ 37-5B-4 , 37-5B-7 to 37-5B-9 , inclusive, or 37-5B-17 , the franchisee may a…

An initial application for the notice filing of a franchise shall be made by filing with the director of the Division of Insurance a franchise notice filing application and one clean copy of the disclosure document and consent to service of process, accompanied by a fee of two hu…

No person may obtain relief for an action pursuant to § 37-5B-49 : (1) In an action for rescission pursuant to §§ 37-5B-4 , 37-5B-7 to 37-5B-9 , inclusive, or 37-5B-17 unless the action is instituted within one year after the violation occurred; (2) In an action for actual damage…

Any action or proceeding that is pending on July 1, 2008 or may be instituted on the basis of conduct occurring before July 1, 2008, is still subject to the provisions of chapter 37-5A as of June 30, 2008. However, no civil action may be maintained to enforce any liability under …

Any effective registration and administrative order relating to the registrations, rules, statements of policy, interpretative opinions, declaratory rulings, no action determinations, and conditions imposed on the registrations prior to July 1, 2008 remain in effect while they wo…

Chapter 37-5A as of June 30, 2008, exclusively applies to an offer or sale made within one year after July 1, 2008 pursuant to an offering made in good faith before July 1, 2008 on the basis of an exemption available under chapter 37-5A . Source: SL 2008, ch 203 , § 54.

The director may require the franchisor to alter or amend the proposed disclosure document in order to assure full and fair disclosure to prospective purchasers. Source: SL 2008, ch 203 , § 6.