(a) This chapter does not apply to a franchise loan made by a franchisor to a franchisee or a sub-franchisor or by a sub-franchisor to a franchisee.
(b) For purposes of this section:(1) “Franchised business” means a business operated pursuant to a franchise or area franchise by a franchisee or pursuant to a franchise, area franchise or sub-franchise by a sub-franchisor.(2) “Franchise loan” means a commercial loan, as defined in section 914(c), made by a franchisor to a current or prospective franchisee or sub-franchisor or a commercial loan by a sub-franchisor to a current or prospective franchisee for the acquisition, construction, operation, development, equipping, expansion, contraction, consolidation, merger, recapitalization, reorganization, or termination of a franchised business provided that the following conditions are satisfied:(A) The franchisor or sub-franchisor making the franchise loan complies with all applicable federal and state franchise disclosure and registration laws, regulations, rules and orders and the Federal Trade Commission Franchise Rule: Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures 16CFR 436, as amended, in connection with the offer or sale of any franchise, area franchise, or sub-franchise to which the franchise loan relates.(B) The proceeds of the franchise loan are intended by the borrowing franchisee or sub-franchisor for use primarily for other than personal, family, or household purposes.(C) The loan, if secured, is secured solely by the assets of the franchised business to which the franchise loan relates. Property used by the borrower primarily for personal, family, or household purposes, including the borrower’s personal residence, may not be taken as security for the loan.(D) The loan is subject to the implied covenant of good faith under section 11A V.I.C. § 3-103.(E) The lender fully and clearly discloses to the borrower, at or before the time the loan is made, the rates of interest, charges, and costs of the loan.
(1) “Franchised business” means a business operated pursuant to a franchise or area franchise by a franchisee or pursuant to a franchise, area franchise or sub-franchise by a sub-franchisor.
(2) “Franchise loan” means a commercial loan, as defined in section 914(c), made by a franchisor to a current or prospective franchisee or sub-franchisor or a commercial loan by a sub-franchisor to a current or prospective franchisee for the acquisition, construction, operation, development, equipping, expansion, contraction, consolidation, merger, recapitalization, reorganization, or termination of a franchised business provided that the following conditions are satisfied:(A) The franchisor or sub-franchisor making the franchise loan complies with all applicable federal and state franchise disclosure and registration laws, regulations, rules and orders and the Federal Trade Commission Franchise Rule: Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures 16CFR 436, as amended, in connection with the offer or sale of any franchise, area franchise, or sub-franchise to which the franchise loan relates.(B) The proceeds of the franchise loan are intended by the borrowing franchisee or sub-franchisor for use primarily for other than personal, family, or household purposes.(C) The loan, if secured, is secured solely by the assets of the franchised business to which the franchise loan relates. Property used by the borrower primarily for personal, family, or household purposes, including the borrower’s personal residence, may not be taken as security for the loan.(D) The loan is subject to the implied covenant of good faith under section 11A V.I.C. § 3-103.(E) The lender fully and clearly discloses to the borrower, at or before the time the loan is made, the rates of interest, charges, and costs of the loan.
(A) The franchisor or sub-franchisor making the franchise loan complies with all applicable federal and state franchise disclosure and registration laws, regulations, rules and orders and the Federal Trade Commission Franchise Rule: Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures 16CFR 436, as amended, in connection with the offer or sale of any franchise, area franchise, or sub-franchise to which the franchise loan relates.
(B) The proceeds of the franchise loan are intended by the borrowing franchisee or sub-franchisor for use primarily for other than personal, family, or household purposes.
(C) The loan, if secured, is secured solely by the assets of the franchised business to which the franchise loan relates. Property used by the borrower primarily for personal, family, or household purposes, including the borrower’s personal residence, may not be taken as security for the loan.
(D) The loan is subject to the implied covenant of good faith under section 11A V.I.C. § 3-103.
(E) The lender fully and clearly discloses to the borrower, at or before the time the loan is made, the rates of interest, charges, and costs of the loan.
(c) For purposes of subsection (b), paragraph (2) subparagraph (B), a lending franchisor or sub-franchisor may rely on any written statement of intended purposes by the borrowing franchisee or sub-franchisor. The statement may be a separate statement signed by the borrowing franchisee or sub-franchisor or may be contained in another document signed by the borrowing franchisee or sub-franchisor. The lending franchisor or sub-franchisor may not be required to ascertain that the proceeds of a franchise loan are used in accordance with the statement of intended purposes.
(d) Nothing in this section is intended to abrogate or diminish the application of any other laws that are designed to protect borrowers, including, but not limited to, laws pertaining to licensing, unfair competition, usury and conflicts of interest.