Regulation in Wisconsin

Chapter 553 of the Wisconsin Statutes, the "Wisconsin Franchise Investment Law," was adopted in 1972 and was administered by the Office of the Commissioner of Securities. The focus of that Law was Sec. 553.21, Wis. Stats., which stated: "No person may sell or offer in this state any franchise unless the offer of the franchise has been registered under this chapter or exempted."

Under the 1972 Law, most franchisors were required to file their offering circulars with the Office prior to any offer or sale of the franchises in this state. Through the rule-making authority of the Commissioner, the staff of the Commissioner's Office reviewed the offering circulars and required compliance with the disclosure standards of NASAA Guidelines prior to registration in Wisconsin.

July 1, 1996 saw major changes to franchise regulation in Wisconsin. First, the Office of the Commissioner of Securities became the Division of Securities within the newly created Department of Financial Institutions. Second, Chapter 553, Wis. Stats., was amended to eliminate the authority of the Division to perform any review of a franchise filing prior to registration in Wisconsin. The registration requirement still exists, but only as a notice filing, and only prior to any sales being made in Wisconsin. The offer of a franchise is no longer covered by the registration requirement. Franchisors continue to be required to provide a disclosure document to prospective franchisees, but no regulatory review of the document takes place in Wisconsin. Indeed, the amended law permits a franchisor to use either the FTC Rule or an offering circular meeting the NASAA Guidelines.

The Division continues to administer Chapter 553, Wis. Stats., focusing its resources on detection and prosecution of fraud in the offer and sale of franchises, education of prospective franchisees, and assistance to persons seeking to comply with the Wisconsin Franchise Investment Law.

Note: The Fair Dealership Law (Chapter 135, Wis. Stats., as summarized earlier) remains in effect. That Law contains provisions that may supersede those contracted to between franchisor and franchisee.