Md. Code Regs. 24.05.10.08

Current through Register Vol. 51, No. 24, December 2, 2024

Section 24.05.10.08 - Application and Processing Procedures

A. Equity Participation Financing Application. Equity participation financing applications shall be made upon standard forms prescribed by the Authority. Each application shall contain a business plan including the following documentation:

(1) A description of the enterprise and the franchisor, existing business, or technology-based business and their management, product, and market;

(2) A statement of the amount, immediacy of need, and projected use of the capital required;

(3) A statement of the potential economic impact of the purchase of qualified securities;

(4) A copy of the most recent Maryland offering circular of the franchisor;

(5) Information that relates to the satisfaction of the applicant's requirements of Regulation .04 of this chapter;

(6) A copy of the articles of incorporation filed with the state of incorporation, bylaws, partnership agreement, or other organizational documents, and most recent financial statements of the applicant;

(7) A copy of the lease or deed to the property, or the contract or option to purchase the property;

(8) Photographs of the site and any existing buildings; and

(9) Other information the Authority requires.

B. Processing of Application. To make an initial determination of the eligibility of the applicant and the franchisor in accordance with these regulations, the Authority's staff shall perform an initial review of each application and may also perform a preliminary audit investigation of the enterprise's books and records.

C. Final Processing. Before approval of the equity participation financing, the applicant shall provide the following documentation for review and approval by the Authority:

(1) Evidence of zoning compliance; and

(2) If a loan guaranty is requested, a copy of a lender's commitment letter to provide financing which, at a minimum, shall state the amount, rate, and terms of the financing.

D. Equity Participation Financing Approval. Approval of equity participation financing shall be evidenced by a resolution and commitment letter from the Authority to the applicant. The Authority is not obligated to take further action on equity participation financing after issuance of a commitment letter until an applicant executes and returns the commitment letter to the Authority.

E. Equity Participation Financing Documents. The Authority, or, in the case of a guaranty, the lender, shall provide the enterprise with copies of relevant standard form equity participation financing documents which may include:

(1) An investment agreement, loan agreement, limited partnership agreement, preferred stock purchase agreement, or other investment document;

(2) A deed of trust or indemnity deed of trust;

(3) A security agreement;

(4) Financing statements;

(5) A guaranty agreement;

(6) A personal guaranty agreement;

(7) A franchisor's cooperation agreement;

(8) A landlord's waiver;

(9) Subordination agreements; and

(10) Other documents the Authority may require.

F. Taxes. Taxes and assessments against the enterprise or any collateral which are due and payable shall be paid at or before closing.

G. Fees.

(1) A franchise applicant shall pay a $50 preapplication fee and a $100 application fee.

(2) An applicant acquiring an existing business and an applicant acquiring a technology-based business shall pay a $250 preapplication fee and a $250 application fee.

(3) The applicant may also be required to reimburse the Authority for expense incurred in making the equity participation financing and for filing fees, credit reports, appraisals, and other expenses.

Md. Code Regs. 24.05.10.08

Regulation .08A and G amended effective April 16, 1990 (17:7 Md. R. 853); December 7, 1992 (19:24 Md. R. 2128)