Special Guest Author John Carter: Michigan Franchise Investment Law

McDonald’s, Burger King, and Dunkin Donuts are three examples of popular franchise businesses. The Michigan Franchise Investment Law defines a “Franchise” as follows:

“Franchise” means a contractor agreement, either express or implied, whether oral or written, between 2 or more people to which all of the following apply:

–A franchisee is given the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system provided mostly by a franchisor.

–A franchisee has the right to conduct business substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate.

–And last, the Franchisee is required to pay, either directly or indirectly, a franchise fee.

A franchisor is the person who sells the franchise while the franchisee is the individual who buys and operates the franchise.

Franchisees are not required to register with the Department of Attorney General, Franchise Section. You may contact the county clerk’s office or ask for city tax rolls to discover who pays taxes at that property.

Generally, franchisors must register with the Department of Attorney General, Franchise Section, prior to offering or selling franchises in the State of Michigan. This “Notice of Intent” should be typed on the franchisor’s letterhead and meet the following format:

1.      Name of franchisor,

2.      Franchisor’s business name’ and

3.      Franchisor’s principal business address.

The franchisor should also include the type of business they will operate in the Notice of Intent.  A $250.00 check pay to the State of Michigan must accompany the Notice.

The Michigan Department of Attorney General, Franchise Section, does not review franchise disclosure documents (FDDs) for compliance with state or federal law. Because Michigan is a “notice only” state, the law only requires that franchisors register with Attorney General once a year if they wish to offer or sell franchises in the State of Michigan.

You can read a copy of the Michigan Franchise Investment Law (MFIL) here.  Read more: http://www.michigan.gov/ag/0,4534,7-164-48127-198444–F,00.html 

John T. Carter is a Partner with Witzke, Berry, Carter & Wander, PLLC in Bloomfield Hills, MI. Mr. Carter leads the firm’s Business Law and Commercial Transactions group and he has over 18 years of experience working with Michigan based organizations that service the health care, technology and professional services sectors. Contact John by telephone at 248-481-4000 or by e-mail at john@witzkeberry.com.