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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
| |||||||||||||||||||
3 | represented in the General Assembly:
| |||||||||||||||||||
4 | Section 5. The Illinois Business Brokers Act of 1995 is | |||||||||||||||||||
5 | amended by changing Section 10-80 as follows:
| |||||||||||||||||||
6 | (815 ILCS 307/10-80)
| |||||||||||||||||||
7 | Sec. 10-80.
Persons exempt from registration and other
| |||||||||||||||||||
8 | duties under law; burden of proof thereof.
| |||||||||||||||||||
9 | (a) The following persons are exempt from the
requirements | |||||||||||||||||||
10 | of this Act:
| |||||||||||||||||||
11 | (1) Any attorney who is licensed to practice in this | |||||||||||||||||||
12 | State, while
engaged in the practice of law
and whose | |||||||||||||||||||
13 | service in relation to the business broker transaction is
| |||||||||||||||||||
14 | incidental to the attorney's practice.
| |||||||||||||||||||
15 | (2) Any person licensed as a real estate broker or | |||||||||||||||||||
16 | salesperson under the
Illinois Real Estate License Act of | |||||||||||||||||||
17 | 2000 who is primarily engaged
in business
activities for | |||||||||||||||||||
18 | which a license is required under that Act and who, on an
| |||||||||||||||||||
19 | incidental basis, acts as a business broker.
| |||||||||||||||||||
20 | (3) Any dealer, salesperson, or investment adviser | |||||||||||||||||||
21 | registered pursuant
to the Illinois
Securities Law of 1953 | |||||||||||||||||||
22 | or any investment adviser
representative, or any person who | |||||||||||||||||||
23 | is regularly engaged in the business of
offering or selling |
| |||||||
| |||||||
1 | securities in a transaction exempted under subsection C, H,
| ||||||
2 | M, R, Q, or S of Section 4 of the Illinois Securities Law | ||||||
3 | of 1953 or subsection
G of Section 4 of the Illinois | ||||||
4 | Securities Law of 1953 provided that such person
is | ||||||
5 | registered pursuant to federal securities law.
| ||||||
6 | (4) An associated person described in subdivision | ||||||
7 | (h)(2) of Section 15
of the Federal 1934 Act.
| ||||||
8 | (5) An investment adviser registered pursuant to | ||||||
9 | Section 203 of the
Federal 1940 Investment Advisors Act.
| ||||||
10 | (6) A person described in subdivision (a)(11) of | ||||||
11 | Section 202 of the
Federal 1940 Investment Advisors Act.
| ||||||
12 | (7) Any person who is selling a business owned or | ||||||
13 | operated (in whole or
in part) by that person in a one time | ||||||
14 | transaction.
| ||||||
15 | (b) This Act shall not be deemed to apply in any manner, | ||||||
16 | directly or
indirectly, to: (i) a State bank or national bank, | ||||||
17 | as those terms are defined
in the Illinois Banking Act, or any | ||||||
18 | subsidiary of a State bank or national
bank;
(ii) a bank | ||||||
19 | holding company, as that term is defined in the Illinois Bank
| ||||||
20 | Holding Company Act of 1957, or any subsidiary of a bank | ||||||
21 | holding company; (iii)
a foreign banking corporation, as that | ||||||
22 | term is defined in the Foreign Banking
Office Act, or any | ||||||
23 | subsidiary of a foreign banking corporation; (iv) a
| ||||||
24 | representative office, as that term is defined in the Foreign | ||||||
25 | Bank
Representative Office Act; (v) a corporate fiduciary, as | ||||||
26 | that term is defined
in the Corporate Fiduciary Act, or any |
| |||||||
| |||||||
1 | subsidiary of a corporate fiduciary;
(vi) a savings bank | ||||||
2 | organized under the Savings Bank Act, or a federal savings
bank | ||||||
3 | organized under federal law, or any subsidiary of a savings | ||||||
4 | bank or
federal savings bank; (vii) a savings bank holding | ||||||
5 | company organized under the
Savings Bank Act, or any subsidiary | ||||||
6 | of a savings bank holding company; (viii)
an association or | ||||||
7 | federal association, as those terms are defined in the
Illinois | ||||||
8 | Savings and Loan Act of 1985, or any subsidiary of an | ||||||
9 | association or
federal association; (ix) a foreign savings and | ||||||
10 | loan association or foreign
savings bank subject to the | ||||||
11 | Illinois Savings and Loan Act of 1985, or any
subsidiary of a | ||||||
12 | foreign savings and loan association or foreign savings bank;
| ||||||
13 | or (x) a savings and loan association holding company, as that | ||||||
14 | term is defined
in the Illinois Savings and Loan Act of 1985, | ||||||
15 | or any subsidiary of a savings
and loan association holding | ||||||
16 | company.
| ||||||
17 | (b-1) Any franchise seller as defined in the Federal Trade | ||||||
18 | Commission rule entitled Disclosure Requirements and | ||||||
19 | Prohibitions Concerning Franchising, 16 C.F.R. Part 436.1(j), | ||||||
20 | as it may be amended, is exempt from the requirements of this | ||||||
21 | Act. Persons registered under the Illinois Franchise | ||||||
22 | Disclosure Act
of 1987 (and their employees) are exempt from | ||||||
23 | the requirements of this Act as
to: offers and sales in | ||||||
24 | connection with franchising activities; or
assisting any of | ||||||
25 | their franchisees in the offer or sale of a franchise by any
| ||||||
26 | such franchisee for the franchisee's own account regardless of |
| |||||||
| |||||||
1 | whether the sale
is effected by or through the registered | ||||||
2 | persons.
| ||||||
3 | (b-2) Any certified public accountant licensed to practice | ||||||
4 | in Illinois,
while engaged in the practice as a certified | ||||||
5 | public accountant and whose
service in relation to the business | ||||||
6 | broker transaction is incidental to his or
her practice, is | ||||||
7 | exempt from the requirements of this Act.
| ||||||
8 | (b-3) Any publisher, or regular employee of such publisher, | ||||||
9 | of a bona fide
newspaper or news magazine of regular and | ||||||
10 | established paid circulation who, in
the routine course of | ||||||
11 | selling advertising, advertises businesses for sale and
in | ||||||
12 | which no other related services are provided is exempt from the | ||||||
13 | requirements
of this Act.
| ||||||
14 | (c) The burden of proof of any exemption or
classification | ||||||
15 | provided in this Act shall be on the party
claiming the | ||||||
16 | exemption or classification.
| ||||||
17 | (Source: P.A. 90-70, eff. 7-8-97; 91-245, eff. 12-31-99.)
| ||||||
18 | Section 10. The Business Opportunity Sales Law of 1995 is | ||||||
19 | amended by changing Sections 5-10, 5-30 and 5-35 as follows:
| ||||||
20 | (815 ILCS 602/5-10)
| ||||||
21 | Sec. 5-10. Exemptions. Registration pursuant to Section | ||||||
22 | 5-30
shall not apply to any of the
following:
| ||||||
23 | (a) Any offer or sale of a business opportunity for which
| ||||||
24 | the immediate cash payment made by the purchaser for any
|
| |||||||
| |||||||
1 | business opportunity is at least $25,000 if the immediate cash
| ||||||
2 | payment does not exceed 20% of the purchaser's net worth as
| ||||||
3 | determined exclusive of principal residence, furnishings
| ||||||
4 | therein, and automobiles; provided, however, the Secretary of
| ||||||
5 | State may by rule or regulation withdraw or further condition
| ||||||
6 | the availability of this exemption.
| ||||||
7 | (b) Any offer or sale of a business opportunity which
the | ||||||
8 | seller does not advertise, solicit, or sell for an initial | ||||||
9 | payment to the seller or a
person recommended by the seller | ||||||
10 | exceeding $500.
| ||||||
11 | (c) Any offer or sale of a business opportunity where the
| ||||||
12 | seller has a net worth of not less than $1,000,000 as | ||||||
13 | determined
on the basis of the seller's most recent audited | ||||||
14 | financial
statement, prepared within 13 months of the first | ||||||
15 | offer in this
State. Net worth may be determined on a | ||||||
16 | consolidated basis where
the seller is at least 80% owned by | ||||||
17 | one person and that person
expressly guarantees the obligations | ||||||
18 | of the seller with regard
to the offer or sale of any business | ||||||
19 | opportunity claimed to be
exempt under this subsection. The | ||||||
20 | Secretary of State may by rule
or regulation withdraw or | ||||||
21 | further condition the availability of
this exemption.
| ||||||
22 | (d) Any offer or sale of a business opportunity where the
| ||||||
23 | purchaser has a net worth of not less than $250,000. Net worth
| ||||||
24 | shall be determined exclusive of principal residence,
| ||||||
25 | furnishings therein, and automobiles. The Secretary of State | ||||||
26 | may
by rule or regulation withdraw or further condition the
|
| |||||||
| |||||||
1 | availability of this exemption.
| ||||||
2 | (e) Any offer or sale of a business opportunity where the
| ||||||
3 | purchaser is a bank, savings and loan association, trust
| ||||||
4 | company, insurance company, credit union, or investment | ||||||
5 | company
as defined by the federal Investment Company Act of | ||||||
6 | 1940,
pension or profit sharing trust, or other financial | ||||||
7 | institution
or institutional buyer, or a dealer registered | ||||||
8 | under the
Illinois Securities Law of 1953,
where the purchaser | ||||||
9 | is acting for itself or in a fiduciary
capacity.
| ||||||
10 | (f) Any offer or sale of a business opportunity which is
| ||||||
11 | defined as a franchise under the Franchise Disclosure Act of | ||||||
12 | 1987 provided that
the seller delivers to each purchaser 14 at | ||||||
13 | the earlier of the
first personal meeting, or 10 business days | ||||||
14 | prior to the earlier
of the execution by a purchaser of any | ||||||
15 | contract or agreement
imposing a binding legal obligation on | ||||||
16 | the purchaser or the
payment by a purchaser of any | ||||||
17 | consideration in connection with
the offer or sale of the | ||||||
18 | business opportunity, one of the
following disclosure | ||||||
19 | documents:
| ||||||
20 | (1) The Franchise Offering Circular provided for under
| ||||||
21 | the Franchise Disclosure Act of 1987 which the Secretary of | ||||||
22 | State may
adopt by rule or regulation; or
| ||||||
23 | (2) A disclosure document prepared in accordance with | ||||||
24 | the requirements of Section 16 of the Illinois Franchise | ||||||
25 | Disclosure Act of 1987, as it may be amended. pursuant to | ||||||
26 | the
Federal Trade Commission rule entitled Disclosure
|
| |||||||
| |||||||
1 | Requirements and Prohibitions Concerning Franchising and
| ||||||
2 | Business Opportunity Ventures, 16 C.F.R. Sec. 436 (1979).
| ||||||
3 | For the purposes of this subsection, a personal meeting
| ||||||
4 | shall mean a face-to-face meeting between the purchaser and | ||||||
5 | the
seller or their representatives, which is held for the | ||||||
6 | purpose
of discussing the offer or sale of a business | ||||||
7 | opportunity.
| ||||||
8 | (g) Any offer or sale of a business opportunity for which
| ||||||
9 | the cash payment required to be made by a purchaser for any | ||||||
10 | business
opportunity does not exceed $500 and the payment is | ||||||
11 | made for the
not-for-profit sale of sales demonstration | ||||||
12 | equipment, material,
or samples or the payment is made for | ||||||
13 | product inventory sold to
the purchaser at a bona fide | ||||||
14 | wholesale price.
| ||||||
15 | (h) Any offer or sale of a business opportunity which the
| ||||||
16 | Secretary of State exempts by order or a class of business
| ||||||
17 | opportunities which the Secretary of State exempts by rule or
| ||||||
18 | regulation upon the finding that such exemption would not be
| ||||||
19 | contrary to public interest and that registration would not be
| ||||||
20 | necessary or appropriate for the protection of purchasers.
| ||||||
21 | (Source: P.A. 91-809, eff. 1-1-01.)
| ||||||
22 | (815 ILCS 602/5-30)
| ||||||
23 | Sec. 5-30. Registration.
| ||||||
24 | (a) In order to register a business opportunity, the seller
| ||||||
25 | shall file with the Secretary of State one of the following
|
| |||||||
| |||||||
1 | disclosure documents with the appropriate cover sheet as
| ||||||
2 | required by subsection (b) of Section 5-35 of this Law, a | ||||||
3 | consent to service of
process as specified in subsection (b) of | ||||||
4 | this Section, and the
appropriate fee as required by subsection | ||||||
5 | (c) of this Section
which is not returnable in any event:
| ||||||
6 | (1) The Business Opportunity Disclosure Document | ||||||
7 | Franchise Offering Circular which the
Secretary of State | ||||||
8 | may prescribe by rule or regulation; or
| ||||||
9 | (2) A disclosure document prepared pursuant to the
| ||||||
10 | Federal Trade Commission rule entitled Disclosure
| ||||||
11 | Requirements and Prohibitions Concerning Franchising , 16 | ||||||
12 | C.F.R. Part 436, as it may be amended and
Business | ||||||
13 | Opportunity Venture, 16 C.F.R. Sec. 436 (1979). The
| ||||||
14 | Secretary of State may by rule or regulation adopt any
| ||||||
15 | amendment to the disclosure document prepared pursuant to | ||||||
16 | 16
C.F.R. Sec. 436 (1979), that has been adopted by the | ||||||
17 | Federal
Trade Commission ; or
| ||||||
18 | (3) A disclosure document prepared pursuant to | ||||||
19 | subsection (b) of Section
5-35 of this Law.
| ||||||
20 | (b) Every seller shall file, in the form as the Secretary
| ||||||
21 | of State may prescribe, an irrevocable consent appointing the
| ||||||
22 | Secretary of State or the successor in office to be the | ||||||
23 | seller's
attorney to receive service of any lawful process in | ||||||
24 | any
noncriminal suit, action or proceeding against the seller | ||||||
25 | or the
seller's successor, executor or administrator which | ||||||
26 | arises under
this Law after the consent has been filed, with |
| |||||||
| |||||||
1 | the same force
and validity as if served personally on the | ||||||
2 | person filing the
consent. Service may be made by delivering a | ||||||
3 | copy of the process
in the office of the Secretary of State, | ||||||
4 | but is not effective
unless the plaintiff or petitioner in a | ||||||
5 | suit, action or
proceeding, forthwith sends notice of the | ||||||
6 | service and a copy of
the process by registered or certified | ||||||
7 | mail, return receipt
requested, to the defendant's or | ||||||
8 | respondent's most current
address on file with the Secretary of | ||||||
9 | State, and the plaintiff's
affidavit of compliance with this | ||||||
10 | subsection is filed in the
case on or before the return date of | ||||||
11 | the process, if any, or
within such further time as the court | ||||||
12 | allows.
| ||||||
13 | (c)(1) The Secretary of State shall by rule or regulation
| ||||||
14 | impose and shall collect fees necessary for the | ||||||
15 | administration
of this Law including, but not limited to, | ||||||
16 | fees for the
following purposes:
| ||||||
17 | (A) filing a disclosure document and renewal fee;
| ||||||
18 | (B) interpretive opinion fee;
| ||||||
19 | (C) acceptance of service of process pursuant to | ||||||
20 | subsection (b) of
Section 5-145;
| ||||||
21 | (D) issuance of certification pursuant to Section | ||||||
22 | 5-20; or
| ||||||
23 | (E) late registration fee pursuant to Section | ||||||
24 | 5-30(g).
| ||||||
25 | (2) The Secretary of State may, by rule or regulation,
| ||||||
26 | raise or lower any fee imposed by, and which he or she is
|
| |||||||
| |||||||
1 | authorized by law to collect under this Law.
| ||||||
2 | (d) A registration automatically becomes effective upon
| ||||||
3 | the expiration of the 10th full business day after a complete
| ||||||
4 | filing, provided that no order has been issued or proceeding
| ||||||
5 | pending under Section 5-45 of this Law. The Secretary of State | ||||||
6 | may
by order waive or reduce the time period prior to | ||||||
7 | effectiveness,
provided that a complete filing has been made. | ||||||
8 | The Secretary of
State may by order defer the effective date | ||||||
9 | until the expiration
of the 10th full business day after the | ||||||
10 | filing of any amendment.
| ||||||
11 | (e) The registration is effective for one year commencing | ||||||
12 | on
the date of effectiveness and may be renewed annually upon | ||||||
13 | the
filing of a current disclosure document accompanied by any
| ||||||
14 | documents or information that the Secretary of State may by | ||||||
15 | rule
or regulation or order require. The annual renewal fee | ||||||
16 | shall be
in the same amount as the initial registration fee as
| ||||||
17 | established under subsection (c) of Section 5-30 of this Law | ||||||
18 | which shall not be
returnable in any event. Failure to renew | ||||||
19 | upon the close of the
one year period of effectiveness will | ||||||
20 | result in expiration of the
registration. The Secretary of | ||||||
21 | State may by rule or regulation
or order require the filing of | ||||||
22 | a sales report.
| ||||||
23 | (f) The Secretary of State may by rule or regulation or
| ||||||
24 | order require the filing of all proposed literature or
| ||||||
25 | advertising prior to its use.
| ||||||
26 | (g) Notwithstanding the foregoing, applications for |
| |||||||
| |||||||
1 | renewal of
registration of business opportunities may be filed | ||||||
2 | within 30 days following
the expiration of the registration | ||||||
3 | provided that the applicant pays the annual
registration fee | ||||||
4 | together with an additional amount equal to the annual
| ||||||
5 | registration fee and files any other information or documents | ||||||
6 | that the
Secretary of State
may prescribe by rule or order. Any | ||||||
7 | application filed within 30 days
following the expiration of | ||||||
8 | the registration shall be automatically effective
as of the | ||||||
9 | time of the earlier expiration provided that the proper fee has | ||||||
10 | been
paid to the Secretary of State.
| ||||||
11 | (Source: P.A. 92-308, eff. 1-1-02.)
| ||||||
12 | (815 ILCS 602/5-35)
| ||||||
13 | Sec. 5-35. Disclosure requirements.
| ||||||
14 | (a) It shall be unlawful for any person to offer or, sell
| ||||||
15 | any business opportunity required to be registered under this
| ||||||
16 | Law unless a written disclosure document as filed under | ||||||
17 | subsection (a) of
Section
5-30 of this Law is delivered to each | ||||||
18 | purchaser at least 14 10
business days prior to the execution | ||||||
19 | by a purchaser of any
contract or agreement imposing a binding | ||||||
20 | legal obligation on the
purchaser or the payment by a purchaser | ||||||
21 | of any consideration in
connection with the offer or sale of | ||||||
22 | the business opportunity.
| ||||||
23 | (b) The disclosure document shall have a cover sheet which
| ||||||
24 | is entitled, in at least 10-point bold type, "DISCLOSURE
| ||||||
25 | REQUIRED BY THE STATE OF ILLINOIS." Under the title shall |
| |||||||
| |||||||
1 | appear
the statement in at least 10-point bold type that "THE
| ||||||
2 | REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE
| ||||||
3 | APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE STATE OF
| ||||||
4 | ILLINOIS. THE INFORMATION CONTAINED IN THIS DISCLOSURE | ||||||
5 | DOCUMENT
HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY | ||||||
6 | QUESTIONS
OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL | ||||||
7 | ADVICE
BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE | ||||||
8 | TO BE
PROVIDED 10 BUSINESS DAYS TO REVIEW THIS DOCUMENT BEFORE | ||||||
9 | SIGNING
ANY CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT TO THE | ||||||
10 | SELLER OR
THE SELLER'S REPRESENTATIVE". The seller's name and | ||||||
11 | principal
business address, along with the date of the | ||||||
12 | disclosure document
shall also be provided on the cover sheet. | ||||||
13 | No other information
shall appear on the cover sheet. The | ||||||
14 | disclosure document shall
contain the following information | ||||||
15 | unless the seller uses a
disclosure document as provided in | ||||||
16 | paragraph (1) or (2) of subsection (a) of
Section 5-30
of this | ||||||
17 | Law:
| ||||||
18 | (1) The names and residential addresses of those
| ||||||
19 | salespersons who will engage in the offer or sale of the
| ||||||
20 | business opportunity in this State.
| ||||||
21 | (2) The name of the seller, whether the seller is
doing | ||||||
22 | business as an individual, partnership or corporation;
the | ||||||
23 | names under which the seller has conducted, is
conducting | ||||||
24 | or intends to conduct business; and the name of
any parent | ||||||
25 | or affiliated company that will engage in
business | ||||||
26 | transactions with purchasers or which will take
|
| |||||||
| |||||||
1 | responsibility for statements made by the seller.
| ||||||
2 | (3) The names, addresses and titles of the seller's
| ||||||
3 | officers, directors, trustees, general managers, principal
| ||||||
4 | executives, agents, and any other persons charged with
| ||||||
5 | responsibility for the seller's business activities | ||||||
6 | relating
to the sale of the business opportunity.
| ||||||
7 | (4) Prior business experience of the seller relating
to | ||||||
8 | business opportunities including:
| ||||||
9 | (A) The name, address, and a description of any
| ||||||
10 | business opportunity previously offered by the seller;
| ||||||
11 | (B) The length of time the seller has offered
each | ||||||
12 | such business opportunity; and
| ||||||
13 | (C) The length of time the seller has conducted
the | ||||||
14 | business opportunity currently being offered to the
| ||||||
15 | purchaser.
| ||||||
16 | (5) With respect to persons identified in item (3) of | ||||||
17 | this subsection:
| ||||||
18 | (A) A description of the persons' business
| ||||||
19 | experience for the 10 year period preceding the filing
| ||||||
20 | date of this disclosure document. The description of
| ||||||
21 | business experience shall list principal occupations
| ||||||
22 | and employers; and
| ||||||
23 | (B) A listing of the persons' educational and
| ||||||
24 | professional backgrounds including, the names of
| ||||||
25 | schools attended and degrees received, and any other
| ||||||
26 | information that will demonstrate sufficient knowledge
|
| |||||||
| |||||||
1 | and experience to perform the services proposed.
| ||||||
2 | (6) Whether the seller or any person identified in
item | ||||||
3 | (3) of this subsection:
| ||||||
4 | (A) Has been convicted of any felony, or pleaded
| ||||||
5 | nolo contendere to a felony charge, or has been the
| ||||||
6 | subject of any criminal, civil or administrative
| ||||||
7 | proceedings alleging the violation of any business
| ||||||
8 | opportunity law, securities law, commodities law,
| ||||||
9 | franchise law, fraud or deceit, embezzlement,
| ||||||
10 | fraudulent conversion, restraint of trade, unfair or
| ||||||
11 | deceptive practices, misappropriation of property or
| ||||||
12 | comparable allegations;
| ||||||
13 | (B) Has filed in bankruptcy, been adjudged
| ||||||
14 | bankrupt, been reorganized due to insolvency, or was an
| ||||||
15 | owner, principal officer or general partner or any
| ||||||
16 | other person that has so filed or was so adjudged or
| ||||||
17 | reorganized during or within the last 7 years.
| ||||||
18 | (7) The name of the person identified in item (6) of | ||||||
19 | this
subsection, nature of and parties to
the action or | ||||||
20 | proceeding, court or other forum, date of the
institution | ||||||
21 | of the action, docket references to the action,
current | ||||||
22 | status of the action or proceeding, terms and
conditions or | ||||||
23 | any order or decree, the penalties or damages
assessed and | ||||||
24 | terms of settlement.
| ||||||
25 | (8) The initial payment required, or when the exact
| ||||||
26 | amount cannot be determined, a detailed estimate of the
|
| |||||||
| |||||||
1 | amount of the initial payment to be made to the seller.
| ||||||
2 | (9) A detailed description of the actual services the
| ||||||
3 | seller agrees to perform for the purchaser.
| ||||||
4 | (10) A detailed description of any training the seller
| ||||||
5 | agrees to provide for the purchaser.
| ||||||
6 | (11) A detailed description of services the seller
| ||||||
7 | agrees to perform in connection with the placement of
| ||||||
8 | equipment, products or supplies at a location, as well as
| ||||||
9 | any agreement necessary in order to locate or operate
| ||||||
10 | equipment, products or supplies on a premises neither owned
| ||||||
11 | nor leased by the purchaser or seller.
| ||||||
12 | (12) A detailed description of any license or
permit | ||||||
13 | that will be necessary in order for the purchaser
to engage | ||||||
14 | in or operate the business opportunity.
| ||||||
15 | (13) The business opportunity seller that is required
| ||||||
16 | to secure a bond under Section 5-50 of this Law, shall
| ||||||
17 | state in the disclosure document "As required by the State
| ||||||
18 | of Illinois, the seller has secured a bond issued by | ||||||
19 | (insert
name and address of surety company), a surety | ||||||
20 | company,
authorized to do business in this State. Before | ||||||
21 | signing a
contract or agreement to purchase this business | ||||||
22 | opportunity,
you should check with the surety company to | ||||||
23 | determine the
bond's current status.".
| ||||||
24 | (14) Any representations made by the seller to the
| ||||||
25 | purchaser concerning sales or earnings that may be made | ||||||
26 | from
this business opportunity, including, but not limited |
| |||||||
| |||||||
1 | to:
| ||||||
2 | (A) The bases or assumptions for any actual,
| ||||||
3 | average, projected or forecasted sales, profits, | ||||||
4 | income
or earnings;
| ||||||
5 | (B) The total number of purchasers who, within a
| ||||||
6 | period of 3 years of the date of the disclosure
| ||||||
7 | document, purchased a business opportunity involving
| ||||||
8 | the product, equipment, supplies or services being
| ||||||
9 | offered to the purchaser; and
| ||||||
10 | (C) The total number of purchasers who, within 3
| ||||||
11 | years of the date of the disclosure document, purchased
| ||||||
12 | a business opportunity involving the product,
| ||||||
13 | equipment, supplies or services being offered to the
| ||||||
14 | purchaser who, to the seller's knowledge, have | ||||||
15 | actually
received earnings in the amount or range | ||||||
16 | specified.
| ||||||
17 | (15) Any seller who makes a guarantee to a purchaser
| ||||||
18 | shall give a detailed description of the elements of the
| ||||||
19 | guarantee. Such description shall include, but shall not be
| ||||||
20 | limited to, the duration, terms, scope, conditions and
| ||||||
21 | limitations of the guarantee.
| ||||||
22 | (16) A statement of:
| ||||||
23 | (A) The total number of business opportunities
| ||||||
24 | that are the same or similar in nature to those that
| ||||||
25 | have been sold or organized by the seller;
| ||||||
26 | (B) The names and addresses of purchasers who
have |
| |||||||
| |||||||
1 | requested a refund or rescission from the seller
within | ||||||
2 | the last 12 months and the number of those who
have | ||||||
3 | received the refund or rescission; and
| ||||||
4 | (C) The total number of business opportunities
the | ||||||
5 | seller intends to sell in this State within the
next 12 | ||||||
6 | months.
| ||||||
7 | (17) A statement describing any contractual
| ||||||
8 | restrictions, prohibitions or limitations on the | ||||||
9 | purchaser's
conduct. Attach a copy of all business | ||||||
10 | opportunity and other
contracts or agreements proposed for | ||||||
11 | use or in use in this
State including, without limitation, | ||||||
12 | all lease agreements,
option agreements, and purchase | ||||||
13 | agreements.
| ||||||
14 | (18) The rights and obligations of the seller and the
| ||||||
15 | purchaser regarding termination of the business | ||||||
16 | opportunity
contract or agreement.
| ||||||
17 | (19) A statement accurately describing the grounds | ||||||
18 | upon
which the purchaser may initiate legal action to | ||||||
19 | terminate
the business opportunity contract or agreement.
| ||||||
20 | (20) A copy of the most recent audited financial
| ||||||
21 | statement of the seller, prepared within 13 months of the
| ||||||
22 | first offer in this State, together with a statement of any
| ||||||
23 | material changes in the financial condition of the seller
| ||||||
24 | from that date. The Secretary of State may accept the | ||||||
25 | filing of a reviewed
financial statement in lieu of an | ||||||
26 | audited financial statement.
|
| |||||||
| |||||||
1 | (21) A list of the states in which this business
| ||||||
2 | opportunity is registered.
| ||||||
3 | (22) A list of the states in which this disclosure
| ||||||
4 | document is on file.
| ||||||
5 | (23) A list of the states which have denied, suspended
| ||||||
6 | or revoked the registration of this business opportunity.
| ||||||
7 | (24) A section entitled "Risk Factors" containing a
| ||||||
8 | series of short concise statements summarizing the | ||||||
9 | principal
factors which make this business opportunity a | ||||||
10 | high risk or
one of a speculative nature. Each statement | ||||||
11 | shall include a
cross-reference to the page on which | ||||||
12 | further information
regarding that risk factor can be found | ||||||
13 | in the disclosure
document.
| ||||||
14 | (25) Any additional information as the Secretary of
| ||||||
15 | State may require by rule, regulation, or order.
| ||||||
16 | (Source: P.A. 92-308, eff. 1-1-02.)
| ||||||
17 | Section 15. The Franchise Disclosure Act of 1987 is amended | ||||||
18 | by changing Sections 3, 7, 8, 10, 11, 15, 16, 20, 22, 26, 29 and | ||||||
19 | 40 as follows:
| ||||||
20 | (815 ILCS 705/3) (from Ch. 121 1/2, par. 1703)
| ||||||
21 | Sec. 3. Definitions. As used in this Act:
| ||||||
22 | (1) "Franchise" means a contract or agreement, either | ||||||
23 | expressed or
implied, whether oral or written, between two or | ||||||
24 | more persons by which:
|
| |||||||
| |||||||
1 | (a) a franchisee is granted the right to engage in the | ||||||
2 | business of
offering, selling, or distributing goods or | ||||||
3 | services, under a marketing
plan or system prescribed or | ||||||
4 | suggested in substantial part by a franchisor; and
| ||||||
5 | (b) the operation of the franchisee's business | ||||||
6 | pursuant to such plan or
system is substantially associated | ||||||
7 | with the franchisor's trademark, service
mark, trade name, | ||||||
8 | logotype, advertising, or other commercial symbol
| ||||||
9 | designating the franchisor or its affiliate; and
| ||||||
10 | (c) the person granted the right to engage in such | ||||||
11 | business is required
to pay to the franchisor or an | ||||||
12 | affiliate of the franchisor , directly or indirectly, a | ||||||
13 | franchise fee of $500 or more at any time prior to or | ||||||
14 | within the first 6 months of the commencement of operations | ||||||
15 | of the franchised business ;
| ||||||
16 | Provided that this Act shall not apply to any of the | ||||||
17 | following persons,
entities or relationships which may involve | ||||||
18 | or acquire a franchise or any
interest in a franchise:
| ||||||
19 | (i) any franchised business which is operated by | ||||||
20 | the franchisee on the
premises of the franchisor or | ||||||
21 | subfranchisor as long as such franchised
business is | ||||||
22 | incidental to the business conducted by the franchisor | ||||||
23 | or
subfranchisor at such premises, including, without | ||||||
24 | limitation, leased
departments and concessions; or
| ||||||
25 | (ii) a fractional franchise. A "fractional | ||||||
26 | franchise" means any
relationship in which the person |
| |||||||
| |||||||
1 | described therein as a franchisee, or any
of the | ||||||
2 | current directors or executive officers thereof, has | ||||||
3 | been in the
type of business represented by the | ||||||
4 | franchise relationship for more than 2
years and the | ||||||
5 | parties anticipated, or should have anticipated, at | ||||||
6 | the time
the agreement establishing the franchise | ||||||
7 | relationship was reached, that the
sales arising from | ||||||
8 | the relationship would represent no more than 20% of
| ||||||
9 | the sales in dollar volume of the franchisee for a | ||||||
10 | period of at least one
year after the franchisee begins | ||||||
11 | selling the goods or services involved in
the | ||||||
12 | franchise; or
| ||||||
13 | (iii) a franchise agreement for the use of a | ||||||
14 | trademark, service mark,
trade name, logotype, | ||||||
15 | advertising, or other commercial symbol designating a
| ||||||
16 | person who offers on a general basis, for a fee or | ||||||
17 | otherwise, a bona fide
service for the evaluation, | ||||||
18 | testing, or certification of goods, commodities,
or | ||||||
19 | services ; or .
| ||||||
20 | (iv) a franchise relationship covered by the | ||||||
21 | Petroleum Marketing Practices Act, 15 U.S.C. 2801; or | ||||||
22 | (v) a franchise agreement where the franchisee (or | ||||||
23 | its parent or any affiliates) is an entity that has | ||||||
24 | been in business for at least 5 years and has a net | ||||||
25 | worth of at least $5,000,000; or | ||||||
26 | (vi) a franchise agreement where one or more |
| |||||||
| |||||||
1 | purchasers of at least a 50% ownership interest in the | ||||||
2 | franchise: within 60 days of the sale, has been, for at | ||||||
3 | least 2 years, an officer, director, general partner, | ||||||
4 | individual with management responsibility for the | ||||||
5 | offer and sale of the franchisor's franchises or the | ||||||
6 | administrator of the franchised network; or within 60 | ||||||
7 | days of the sale, has been, for at least 2 years, an | ||||||
8 | owner of at least a 25% interest in the franchisor. | ||||||
9 | (2) "Franchisee" means a person to whom a franchise is | ||||||
10 | granted and
includes, unless stated otherwise in this Act: (a) | ||||||
11 | a subfranchisor with
regard to its relationship with a | ||||||
12 | franchisor and (b) a subfranchisee with
regard to its | ||||||
13 | relationship with a subfranchisor.
| ||||||
14 | (3) "Franchisor" means a person who grants a franchise and | ||||||
15 | includes a
subfranchisor with regard to its relationship with a | ||||||
16 | franchisee, unless
stated otherwise in this Act.
| ||||||
17 | (4) "Subfranchise" means any contract or agreement between | ||||||
18 | a franchisor
and a subfranchisor whereby the subfranchisor is | ||||||
19 | granted the right, in
consideration of the payment of a | ||||||
20 | franchise fee in whole or in part for
such right, to grant | ||||||
21 | service franchises to subfranchisees or to sell or negotiate | ||||||
22 | the sale of
franchises . Where used in this Act, unless | ||||||
23 | specifically stated otherwise,
"franchise" includes | ||||||
24 | "subfranchise."
| ||||||
25 | (5) "Subfranchisor" means a person to whom the right to | ||||||
26 | sell subfranchises
is granted.
|
| |||||||
| |||||||
1 | (6) "Order" means a consent, authorization, approval, | ||||||
2 | prohibition, or
requirement applicable to a specific case | ||||||
3 | issued by the Attorney General
Administrator.
| ||||||
4 | (7) "Person" means an individual, a corporation, a | ||||||
5 | partnership, a joint
venture, an association, a joint stock | ||||||
6 | company, a trust, or an
unincorporated organization.
| ||||||
7 | (8) "Rule" means any published regulation or standard of | ||||||
8 | general
application issued by the Administrator.
| ||||||
9 | (9) "Sale" or "sell" includes every contract or agreement | ||||||
10 | of sale of,
contract to sell, or disposition of, a franchise or | ||||||
11 | interest in a franchise
for value.
| ||||||
12 | (10) "State" means the State of Illinois.
| ||||||
13 | (11) "Fraud" and "deceit" are not limited to common law | ||||||
14 | fraud or deceit.
| ||||||
15 | (12) "Offer" or "offer to sell" includes every attempt to | ||||||
16 | offer to
dispose of, or solicitation of an offer to buy, a | ||||||
17 | franchise, any interest
in a franchise or an option to acquire | ||||||
18 | a franchise for value.
| ||||||
19 | (13) "Publish" means publicly to issue or circulate by | ||||||
20 | newspaper, mail,
radio, or television, or otherwise to | ||||||
21 | disseminate to the public.
| ||||||
22 | (14) "Franchise fee" means any fee or charge that a | ||||||
23 | franchisee is
required to pay directly or indirectly for the | ||||||
24 | right to enter into a
business or sell, resell, or distribute | ||||||
25 | goods, services or franchises
under an agreement, including, | ||||||
26 | but not limited to, any such payment for
goods or services, |
| |||||||
| |||||||
1 | provided that the Administrator may by rule define what
| ||||||
2 | constitutes an indirect franchise fee, and provided further | ||||||
3 | that the
following shall not be considered the payment of a | ||||||
4 | franchise fee: (a) the
payment of a reasonable service charge | ||||||
5 | to the issuer of a credit card by an
establishment accepting or | ||||||
6 | honoring such credit card; (b) amounts paid to a
trading stamp | ||||||
7 | company by a person issuing trading stamps in connection with
| ||||||
8 | the retail sale of merchandise or services; (c) the purchase or | ||||||
9 | agreement
to purchase goods for which there is an established | ||||||
10 | market at a bona fide
wholesale price; (d) the payment for | ||||||
11 | fixtures necessary to operate the
business; (e) the payment of | ||||||
12 | rent which reflects payment for the economic
value of the | ||||||
13 | property; or (f) the purchase or agreement to purchase goods
| ||||||
14 | for which there is an established market at a bona fide retail | ||||||
15 | price
subject to a bona fide commission or compensation plan. | ||||||
16 | The Administrator
may by rule define what shall constitute an | ||||||
17 | established market.
| ||||||
18 | (15) "Disclosure statement" means the document provided | ||||||
19 | for in Section
16 of this Act and all amendments to such | ||||||
20 | document.
| ||||||
21 | (16) "Write" or "written" shall include printed, | ||||||
22 | lithographed or any other
means of graphic communication.
| ||||||
23 | (17) (Blank).
| ||||||
24 | (18) "Marketing plan or system" means a plan or system | ||||||
25 | relating to some
aspect of the conduct of a party to a contract | ||||||
26 | in conducting business,
including but not limited to (a) |
| |||||||
| |||||||
1 | specification of price, or special pricing
systems or discount | ||||||
2 | plans, (b) use of particular sales or display equipment
or | ||||||
3 | merchandising devices, (c) use of specific sales techniques, | ||||||
4 | (d) use of
advertising or promotional materials or cooperation | ||||||
5 | in advertising efforts;
provided that an agreement is not a | ||||||
6 | marketing plan or system solely because
a manufacturer or | ||||||
7 | distributor of goods reserves the right to occasionally
require | ||||||
8 | sale at a special reduced price which is advertised on the
| ||||||
9 | container or packaging material in which the product is | ||||||
10 | regularly sold, if
the reduced price is absorbed by the | ||||||
11 | manufacturer or distributor.
| ||||||
12 | (19) "Administrator" means the Illinois Attorney General.
| ||||||
13 | (20) (a) An offer to sell a franchise is made in this State | ||||||
14 | when the
offer either originates from this State or is | ||||||
15 | directed by the offeror to
this State and received at the | ||||||
16 | place to which it is directed. An offer to
sell is accepted | ||||||
17 | in this State when acceptance is communicated to the
| ||||||
18 | offeror in this State; and acceptance is communicated to | ||||||
19 | the offeror in
this State when the offeree directs it to | ||||||
20 | the offeror in this State
reasonably believing the offeror | ||||||
21 | to be in this State and it is received at
the place to | ||||||
22 | which it is directed.
| ||||||
23 | (b) An offer to sell a franchise is not made in this | ||||||
24 | State merely
because the franchisor circulates or there is | ||||||
25 | circulated in this State an
advertisement in (i) a bona | ||||||
26 | fide newspaper or other publication of general,
regular and |
| |||||||
| |||||||
1 | paid circulation which has had more than 2/3 of its | ||||||
2 | circulation
outside this State during the past 12 months, | ||||||
3 | or (ii) a radio or television
program originating outside | ||||||
4 | this State which is received in this State.
| ||||||
5 | (21) "Franchise broker" means any person engaged in the | ||||||
6 | business of
representing a franchisor in offering for sale or | ||||||
7 | selling a franchise and
is not a franchisor , an affiliate of a | ||||||
8 | franchisor or an officer, director or employee of a franchisor | ||||||
9 | or an affiliate of a franchisor
with respect to such franchise. | ||||||
10 | A franchisee shall not be a franchise
broker merely because it | ||||||
11 | receives a payment from the franchisor in
consideration of the | ||||||
12 | referral of a prospective franchisee to the
franchisor, if the | ||||||
13 | franchisee does not otherwise participate in the sale of
a | ||||||
14 | franchise to the prospective franchisee. A franchisee shall not | ||||||
15 | be deemed
to participate in a sale merely because he responds | ||||||
16 | to an inquiry from a
prospective franchisee.
| ||||||
17 | (22) "Salesperson" means any person employed by or | ||||||
18 | representing a
franchise broker , a franchisor or an affiliate | ||||||
19 | of the franchisor in effecting or attempting to effect the | ||||||
20 | offer or sale
of a franchise.
| ||||||
21 | (Source: P.A. 90-642, eff. 7-24-98.)
| ||||||
22 | (815 ILCS 705/7) (from Ch. 121 1/2, par. 1707)
| ||||||
23 | Sec. 7.
Sale by franchisee and extension or renewal of | ||||||
24 | existing
franchise. There shall be exempted from the provisions | ||||||
25 | of Sections 5, 10,
11, 13 and 15 of this Act the offer or sale |
| |||||||
| |||||||
1 | of a franchise by a franchisee
for its own account if the sale | ||||||
2 | is not effected by or through a franchisor.
A sale is not | ||||||
3 | effected by or through a franchisor merely because a
franchisor | ||||||
4 | has a right to approve or disapprove a different franchisee or
| ||||||
5 | requires payment of a reasonable transfer fee or requires the | ||||||
6 | new franchisee to execute a franchise agreement on terms not | ||||||
7 | materially different from the existing franchise agreement .
| ||||||
8 | There shall be exempted from the provisions of Sections 5, | ||||||
9 | 10, 11, 13 and
15 of this Act the extension or renewal of an | ||||||
10 | existing franchise or the
exchange or substitution of a | ||||||
11 | modified or amended franchise agreement where
there is no | ||||||
12 | interruption in the operation of the franchise business by the
| ||||||
13 | franchisee.
| ||||||
14 | (Source: P.A. 85-551.)
| ||||||
15 | (815 ILCS 705/8) (from Ch. 121 1/2, par. 1708)
| ||||||
16 | Sec. 8. Exemptions. There shall be exempted from the | ||||||
17 | registration requirements the offer and sale of a franchise if: | ||||||
18 | the franchisor has a net worth on a consolidated basis, | ||||||
19 | according to its most recent audited financial statement, of | ||||||
20 | not less than $15,000,000; or the franchisor has a net worth, | ||||||
21 | according to its most recent unaudited financial statement, of | ||||||
22 | not less than $1,000,000 and is at least 80% owned by a | ||||||
23 | corporation which has a net worth on a consolidated basis, | ||||||
24 | according to its most recent audited financial statement, of | ||||||
25 | not less than $15,000,000. |
| |||||||
| |||||||
1 | There shall be exempted from the provisions of
Sections 5, | ||||||
2 | 10, 11, 13 and 15 of this Act the offer and sale of a franchise
| ||||||
3 | if the prospective franchisee qualifies as one of the | ||||||
4 | following:
| ||||||
5 | any bank as defined in Section 3(a)(2) of the Securities | ||||||
6 | Act of
1933 whether acting in its individual or fiduciary | ||||||
7 | capacity or as an
insurance company as defined in Section 2(13) | ||||||
8 | of that Act.
| ||||||
9 | (Source: P.A. 85-551 .)
| ||||||
10 | (815 ILCS 705/10) (from Ch. 121 1/2, par. 1710)
| ||||||
11 | Sec. 10. Registration and Annual Report. No franchisor may | ||||||
12 | sell or
offer to sell a franchise in this State if (1) the | ||||||
13 | franchisee is domiciled
in this State or (2) the offer of the | ||||||
14 | franchise is made or accepted in this
State and the franchise | ||||||
15 | business is or will be located in this State, unless
the | ||||||
16 | franchisor has registered the franchise with the Administrator | ||||||
17 | by
filing such form of notification and disclosure statement
as | ||||||
18 | required under Section 16.
| ||||||
19 | The registration of a franchise shall become effective on | ||||||
20 | the 21st day after the date of the filing of the required | ||||||
21 | materials,
unless
the Administrator has
denied registration | ||||||
22 | under subdivision (a)(3) of Section 22.
| ||||||
23 | The registration of a franchise shall expire 120 days after | ||||||
24 | the franchisor's fiscal year end. Annually, but not later than | ||||||
25 | one business day before the
anniversary date of the
|
| |||||||
| |||||||
1 | registration expires , the franchisor shall file the disclosure | ||||||
2 | statement updated as of
the date of the franchisor's prior | ||||||
3 | fiscal year end a date within 120
days of the anniversary date | ||||||
4 | of the registration .
| ||||||
5 | (Source: P.A. 90-642, eff. 7-24-98.)
| ||||||
6 | (815 ILCS 705/11) (from Ch. 121 1/2, par. 1711)
| ||||||
7 | Sec. 11. Amendments. Within 30 days after the close of each | ||||||
8 | quarter of its fiscal year, the franchisor shall prepare | ||||||
9 | revisions to be attached to its disclosure statement to reflect | ||||||
10 | any material changes to disclosures included, or required to be | ||||||
11 | included, in the 90 days of the occurrence of any
material | ||||||
12 | change in
any facts required to be disclosed, a franchisor | ||||||
13 | whose franchise is
registered under this Act shall amend its | ||||||
14 | disclosure statement . The franchisor and shall
deliver the | ||||||
15 | amended disclosure statement in accordance with the
| ||||||
16 | requirements of subsection (2) of Section 5 and Section 16 of | ||||||
17 | this Act to
any prospective franchisee, including , upon | ||||||
18 | request, to prospective franchisees to whom a
disclosure | ||||||
19 | statement was previously delivered if the material change
| ||||||
20 | relates to or affects the franchisor or the franchise offered | ||||||
21 | to such
prospective franchisees. The amended disclosure | ||||||
22 | statement shall be
filed with the Administrator. An amendment | ||||||
23 | shall not be required if the terms of
the franchise agreement | ||||||
24 | merely reflect changes from the franchisor's
registered | ||||||
25 | franchise made pursuant to negotiations between the franchisee
|
| |||||||
| |||||||
1 | and the franchisor.
| ||||||
2 | The fact that the franchise is considered to be registered | ||||||
3 | is not a
finding that the amended disclosure statement complies | ||||||
4 | with the standard of
disclosure required by this Act.
| ||||||
5 | (Source: P.A. 90-642, eff. 7-24-98.)
| ||||||
6 | (815 ILCS 705/15) (from Ch. 121 1/2, par. 1715)
| ||||||
7 | Sec. 15. Escrow of franchise fees; surety bonds. If the | ||||||
8 | Administrator
finds that a franchisor has failed to demonstrate | ||||||
9 | that adequate financial
arrangements have been made to fulfill | ||||||
10 | obligations to provide real estate,
improvements, equipment, | ||||||
11 | inventory, training, or other items to be included
in the | ||||||
12 | establishment and opening of the franchise business being | ||||||
13 | offered,
the Administrator may by rule or order require the | ||||||
14 | escrow or impoundment of
franchise fees and other funds paid by | ||||||
15 | the franchisee until such obligations
have been fulfilled, or, | ||||||
16 | at the option of the franchisor, the furnishing
of a surety | ||||||
17 | bond as provided by rule of the Administrator, if he finds that
| ||||||
18 | such requirement is necessary and appropriate to protect | ||||||
19 | prospective
franchisees , or, at the option of the franchisor, | ||||||
20 | the deferral of payment of the initial fee until the opening of | ||||||
21 | the franchise business .
| ||||||
22 | (Source: P.A. 85-551.)
| ||||||
23 | (815 ILCS 705/16) (from Ch. 121 1/2, par. 1716)
| ||||||
24 | Sec. 16. Form and contents of disclosure statements. The |
| |||||||
| |||||||
1 | disclosure statement required under this Act shall be prepared | ||||||
2 | in
accordance
with the Federal Trade Commission rule entitled | ||||||
3 | Disclosure Requirements and Prohibitions Concerning | ||||||
4 | Franchising, 16 C.F.R. Part 436, as it may be Uniform Franchise | ||||||
5 | Offering Circular Guidelines as adopted and amended , the | ||||||
6 | Guidelines promulgated
by the North American Securities | ||||||
7 | Administrators Association, Inc., as they may be amended, and | ||||||
8 | the rules adopted by the Administrator pursuant to Section 32 | ||||||
9 | of this Act. Incorporated.
| ||||||
10 | All statements in the disclosure statement shall be free | ||||||
11 | from any false
or misleading statement of a material fact, | ||||||
12 | shall not omit to state any
material fact required to be stated | ||||||
13 | or necessary to make the statements
not misleading, and shall | ||||||
14 | be accurate and complete as of the effective
date thereof.
| ||||||
15 | (Source: P.A. 90-642, eff. 7-24-98.)
| ||||||
16 | (815 ILCS 705/20) (from Ch. 121 1/2, par. 1720)
| ||||||
17 | Sec. 20. Nonrenewal of a franchise. It shall be a violation | ||||||
18 | of this
Act for a franchisor to refuse to renew a franchise of | ||||||
19 | a franchised business
located in this State without | ||||||
20 | compensating the franchisee either by repurchase
or by other | ||||||
21 | means for the diminution in the value of the franchised | ||||||
22 | business
caused by the expiration of the franchise where:
| ||||||
23 | (a) the franchisee is barred by the franchise agreement | ||||||
24 | (or by the refusal
of the franchisor at least 6 months | ||||||
25 | prior to the expiration date of the
franchise to waive any |
| |||||||
| |||||||
1 | portion of the franchise agreement which prohibits
the | ||||||
2 | franchisee) from continuing to conduct substantially the | ||||||
3 | same business
under another trademark, service mark, trade | ||||||
4 | name or commercial symbol in
the same area subsequent to | ||||||
5 | the expiration of the franchise; and or
| ||||||
6 | (b) the franchisee has not been sent notice of the | ||||||
7 | franchisor's intent
not to renew the franchise at least 6 | ||||||
8 | months prior to the expiration date
or any extension | ||||||
9 | thereof of the franchise.
| ||||||
10 | (Source: P.A. 85-551.)
| ||||||
11 | (815 ILCS 705/22) (from Ch. 121 1/2, par. 1722)
| ||||||
12 | Sec. 22. Enforcement.
| ||||||
13 | (a) The Administrator may suspend, terminate,
prohibit or | ||||||
14 | deny the sale of any franchise or registration of any | ||||||
15 | franchise ,
or franchise broker or salesperson if it appears to | ||||||
16 | him that: (1) there has
been a failure to comply with any of | ||||||
17 | the provisions of this Act or the rules
or orders of the | ||||||
18 | Administrator pertaining thereto; or (2) that the disclosure
| ||||||
19 | statement or any amendment thereto
includes any false or | ||||||
20 | misleading statement of a material fact or omits to
state
any | ||||||
21 | material fact required to be stated therein or necessary to | ||||||
22 | make the
statements therein not misleading; or (3)
that the | ||||||
23 | disclosure statement
filed in conjunction with an initial | ||||||
24 | registration under
Section 10 is materially deficient. A | ||||||
25 | disclosure statement is "materially
deficient" if it fails to |
| |||||||
| |||||||
1 | comply with the requirements of the Uniform Franchise
Offering | ||||||
2 | Circular Guidelines referred to in Section 16;
or (4) that the | ||||||
3 | sale of the
franchise would constitute
a misrepresentation, | ||||||
4 | deceit or fraud upon prospective franchisees; or (5)
that any | ||||||
5 | person in this State is engaging in or about to engage in | ||||||
6 | false,
fraudulent or deceptive practices or any device, scheme, | ||||||
7 | or artifice to defraud
in connection with the offer or sale of | ||||||
8 | the franchise; or (6) that any person
identified in the | ||||||
9 | disclosure statement or any person engaged in the offer
or sale | ||||||
10 | of the franchise in this State has been convicted of an | ||||||
11 | offense,
is subject to an order or civil judgment or is a | ||||||
12 | defendant in a proceeding
required to be described in the | ||||||
13 | disclosure statement and the involvement
of such person creates | ||||||
14 | an unreasonable risk to prospective franchisees;
or (7) | ||||||
15 | (blank); or (8) (blank); or (9) that the franchisor's | ||||||
16 | enterprise
or method of business includes or would include | ||||||
17 | activities which are illegal
where performed; or (10) (blank);
| ||||||
18 | or (11) (blank).
| ||||||
19 | In no case shall the Administrator, or any person | ||||||
20 | designated by him, in
the administration of this Act, incur any | ||||||
21 | official or personal liability by
issuing an order or other | ||||||
22 | proceeding or by suspending, denying, prohibiting
or | ||||||
23 | terminating the registration of a franchise broker or | ||||||
24 | salesperson, or by
denying, suspending, terminating or | ||||||
25 | prohibiting the registration of
franchises, or prohibiting the | ||||||
26 | sale of franchises, or by suspending or
prohibiting any person |
| |||||||
| |||||||
1 | from acting as a franchise broker or salesperson.
| ||||||
2 | The Administrator may exercise any of the powers specified | ||||||
3 | in Section 31 of
this Act.
| ||||||
4 | (b) The Administrator, with such assistance as he may from
| ||||||
5 | time to time request of the state's attorneys in the several | ||||||
6 | counties, may
institute proceedings in the circuit court to | ||||||
7 | prevent and restrain
violations of this Act or of any rule or | ||||||
8 | order prescribed or issued under
this Act. In such a | ||||||
9 | proceeding, the court shall determine whether a
violation has | ||||||
10 | been committed, and shall enter such judgment or decree as it
| ||||||
11 | considers necessary to remove the effects of any violation and | ||||||
12 | to prevent
such violation from continuing or from being renewed | ||||||
13 | in the future. The
court, in its discretion, may exercise all | ||||||
14 | powers necessary for this
purpose, including, but not limited | ||||||
15 | to, injunction, revocation, forfeiture
or suspension of the | ||||||
16 | charter, franchise, certificate of authority or
privileges of | ||||||
17 | any corporation, association, limited partnership or other
| ||||||
18 | business organization operating under the laws of this State, | ||||||
19 | dissolution
of domestic corporations or associations, | ||||||
20 | suspension or termination of the
right of foreign corporations | ||||||
21 | or associations to do business in this State,
or restitution or | ||||||
22 | payment of damages by a franchisor to persons injured by
| ||||||
23 | violations of this Act, including without limitation an award | ||||||
24 | of reasonable
attorneys fees and costs.
| ||||||
25 | (Source: P.A. 90-642, eff. 7-24-98.)
|
| |||||||
| |||||||
1 | (815 ILCS 705/26) (from Ch. 121 1/2, par. 1726)
| ||||||
2 | Sec. 26. Private civil actions. Any person who offers,
| ||||||
3 | sells, terminates, or fails to renew a franchise in violation | ||||||
4 | of this
Act shall be liable to the franchisee who may sue for | ||||||
5 | damages caused
thereby. This amendatory Act of 1992 is intended | ||||||
6 | to clarify the
existence of a private right of action under | ||||||
7 | existing law with respect to
the termination or nonrenewal of a | ||||||
8 | franchise in violation of this Act.
In the case of a violation | ||||||
9 | of Section 5, 6, 10, 11, or 15 of the Act,
the franchisee may | ||||||
10 | also sue for rescission.
| ||||||
11 | No franchisee may sue for rescission or damages under this | ||||||
12 | Section 26 who
shall fail, within 30 days from the date of | ||||||
13 | receipt thereof, to accept an
offer to return the consideration | ||||||
14 | paid or to repurchase the franchise
purchased by such person. | ||||||
15 | Every offer provided for in this Section shall
be in writing, | ||||||
16 | shall be delivered to the franchisee or sent by certified
mail | ||||||
17 | addressed to the franchisee at such person's last known | ||||||
18 | address, shall
offer to return any consideration paid or to | ||||||
19 | repurchase the franchise for a
price equal to the full amount | ||||||
20 | paid less any net income received by the
franchisee, plus the | ||||||
21 | legal rate of interest thereon, and may require the
franchisee | ||||||
22 | to return to the person making such offer all unsold goods,
| ||||||
23 | equipment, fixtures, leases and similar items received from | ||||||
24 | such person.
Such offer shall continue in force for 30 days | ||||||
25 | from the date on which it
was received by the franchisee and | ||||||
26 | shall advise the franchisee of such
rights and the period of |
| |||||||
| |||||||
1 | time limited for acceptance thereof. Any
agreement not to | ||||||
2 | accept or refusing or waiving any such offer made during
or | ||||||
3 | prior to the expiration of said 30 days shall be void.
| ||||||
4 | The term "franchisee" as used in this Section shall include | ||||||
5 | the personal
representative or representatives of the | ||||||
6 | franchisee.
| ||||||
7 | Every person who directly or indirectly controls a person | ||||||
8 | liable under
this Section 26, every partner in a firm so | ||||||
9 | liable, every principal
executive officer or director of a | ||||||
10 | corporation so liable, every manager of a limited liability | ||||||
11 | company so liable, every person
occupying a similar status or | ||||||
12 | performing similar functions, and every
employee of a person so | ||||||
13 | liable, who materially aids in the act or
transaction | ||||||
14 | constituting the violation, is also liable jointly and | ||||||
15 | severally
with and to the same extent as such person, unless | ||||||
16 | said person who otherwise
is liable had no knowledge or | ||||||
17 | reasonable basis to have knowledge of the
facts, acts or | ||||||
18 | transactions constituting the alleged violation.
| ||||||
19 | Every franchisee in whose favor judgment is entered in an | ||||||
20 | action
brought under this Section shall be entitled to the | ||||||
21 | costs of the action
including, without limitation, reasonable | ||||||
22 | attorney's fees.
| ||||||
23 | (Source: P.A. 87-1143.)
| ||||||
24 | (815 ILCS 705/29) (from Ch. 121 1/2, par. 1729)
| ||||||
25 | Sec. 29.
Certificate of registration or filing of annual |
| |||||||
| |||||||
1 | report;
admissibility in evidence. In any civil or criminal | ||||||
2 | action brought under
this Act, a Certificate under the seal of | ||||||
3 | this State, signed by the
Administrator, stating whether or not | ||||||
4 | a franchise is registered, or whether
or not an annual report | ||||||
5 | of a franchisor has been filed under Section 10 of
this Act, or | ||||||
6 | whether or not a person has registered as a franchise broker
| ||||||
7 | under Section 13 of this Act, shall constitute prima facie | ||||||
8 | evidence of such
matter, and shall be admissible into evidence | ||||||
9 | at trial without proof of
foundation or additional | ||||||
10 | authenticity.
| ||||||
11 | (Source: P.A. 85-551.)
| ||||||
12 | (815 ILCS 705/40) (from Ch. 121 1/2, par. 1740)
| ||||||
13 | Sec. 40. Fees. | ||||||
14 | (a) The Administrator shall charge and collect the fees
| ||||||
15 | fixed by this Section , or as prescribed by rule of the | ||||||
16 | Administrator . All fees and charges collected under this | ||||||
17 | Section
shall be transmitted to the State Treasurer at least | ||||||
18 | weekly, accompanied by
a detailed statement thereof. Such fees | ||||||
19 | and charges shall be refundable at
the discretion of the | ||||||
20 | Administrator.
| ||||||
21 | (b) The fee for the initial registration of a franchise | ||||||
22 | shall be $500.
| ||||||
23 | (c) The fee for filing an amended disclosure statement | ||||||
24 | shall be $100 if
the amendment pertains to a material change, | ||||||
25 | otherwise $25.
|
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1 | (d) The fee for an interpretive opinion shall be $50.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | (e) The fee for registration of a franchise broker shall be | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | $100 with a
renewal fee of $100.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | (f) The fee for filing an annual report shall be $100.
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5 | (Source: P.A. 85-551.)
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6 | (815 ILCS 705/13 rep.) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | (815 ILCS 705/21 rep.) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Section 20. The Franchise Disclosure Act of 1987 is | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | amended by repealing Sections 13 and 21.
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