South Dakota Franchise Forms - Sd Franchise Business

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South Dakota Franchise Forms FAQ

What is a franchise?

There is a definition of a franchise which has been developed by the Federal Trade Commission. Basically, a franchise involves an owner of a trademark, trade name and/or copyright giving others a license under certain conditions to use these trademarks, trade names or copyrights in providing goods or services to the public. The franchisor is the party who grants the franchise, and the franchisee is the party who receives the franchise.

What is the legal relationship between a franchisor and franchisee?

Technically, the relationship between a franchisor and franchisee is a relationship between two independent contractors. Their rights are determined by the franchise agreement. A franchise then is not a separate business entity, but is a business relationship between two separate business organizations such as a sole proprietorship, a corporation, or a partnership. The relationship between the franchisor and franchisee is controlled by the franchise contract. A corporation, sole proprietorship, or partnership may own the franchise contract or may be the entity entering into the franchise contract.

What laws govern franchises?

There are laws that restrict termination of some franchises. In some states, prior notice of termination is required. Owners of automobile dealership franchises are protected from termination of their dealerships in bad faith. This protection is provided by the Federal Automobile Dealers Franchise Act.


What are Articles of Incorporation?

Articles of Incorporation are legal documents that must be filed with the state government to officially form a corporation. In simple terms, these articles outline important details about the corporation, such as its name, purpose, ownership structure, and the types of activities it will engage in. In South Dakota, the process of filing these articles involves submitting the necessary paperwork to the Secretary of State's office and paying the required fees. This is an important step in establishing a corporation, as it provides legal recognition and protection to the business owners.


What to Include in Articles of Incorporation

When writing the Articles of Incorporation in South Dakota, there are a few important things you should include. First, provide the name of your corporation, making sure it ends with certain words like "corporation," "company," or "incorporated." Next, mention the purpose of your business, which explains what your corporation will do. It's also crucial to specify the initial directors of the corporation, along with their names and addresses. Additionally, you must mention the registered agent, who is the person or entity responsible for receiving legal papers on behalf of the corporation. Lastly, state the number of authorized shares of stock your corporation will have. These are key components to include in your Articles of Incorporation in South Dakota.


1. Full Name of Corporation

The corporation's full name is followed by the location where it is based, which is South Dakota.


2. Principal Place of Business

The Principal Place of Business is the main location where a company or organization carries out its main operations and activities. In South Dakota refers to the specific state where this main place of business is located. It means that the company's headquarters or main office is situated in South Dakota. This is important because it determines the legal jurisdiction and regulations that apply to the company. Being located in South Dakota may offer certain benefits or advantages, such as access to a skilled workforce, favorable tax conditions, or proximity to a specific market.


12. Limitation of Director’s Liability

In South Dakota, there are certain limitations on the liability of directors. This means that directors of a company may not be held personally responsible for the debts or losses of the company in most cases. However, it's important to note that directors can still be held liable if they act negligently, fraudulently, or unlawfully in their duties. Additionally, directors may also be held liable if they breach their fiduciary duty to the company or its shareholders. So while there are some limitations on director's liability in South Dakota, it's important for directors to fulfill their responsibilities and act in the best interests of the company.