Sec. 24.05.10.05. Eligible Franchisors

To be eligible for equity participation financing involving a franchise, an applicant shall obtain or plan to obtain a franchise from a franchisor meeting the following requirements:

A. The franchisor's trademarks, patents, and service marks shall be registered;

B. The franchisor shall:

(1) Have complied with State and federal disclosure and registration laws pertaining to franchising,

(2) Be able to explain, to the Authority's satisfaction, all suits and other legal actions pending against it,

(3) Have the financial resources to support a franchise system,

(4) Be creditworthy by commercial banking standards,

(5) Have been in business for a period of time which demonstrates its capacity to survive successfully in the marketplace,

(6) Have at least one company-owned outlet to function as a prototype store and training facility,

(7) Have existing franchised outlets that have operated successfully in the marketplace;

C. Royalties required by the franchisor should not exceed 10 percent of the franchisee's gross sales.