96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB2508

 

Introduced 1/6/2010, by Sen. Kirk W. Dillard

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 602/5-35

    Amends the Business Opportunity Sales Law of 1995. Provides that a business opportunity disclosure document shall contain a statement informing the prospective purchaser that he or she will be provided 14 days (rather than 10 business days) to review the disclosure document before signing any contract or agreement or making any payment to the seller or the seller's representative. Effective immediately.


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A BILL FOR

 

SB2508 LRB096 14822 KTG 29685 b

1     AN ACT concerning business.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Business Opportunity Sales Law of 1995 is
5 amended by changing Section 5-35 as follows:
 
6     (815 ILCS 602/5-35)
7     Sec. 5-35. Disclosure requirements.
8     (a) It shall be unlawful for any person to offer or, sell
9 any business opportunity required to be registered under this
10 Law unless a written disclosure document as filed under
11 subsection (a) of Section 5-30 of this Law is delivered to each
12 purchaser at least 14 days prior to the execution by a
13 purchaser of any contract or agreement imposing a binding legal
14 obligation on the purchaser or the payment by a purchaser of
15 any consideration in connection with the offer or sale of the
16 business opportunity.
17     (b) The disclosure document shall have a cover sheet which
18 is entitled, in at least 10-point bold type, "DISCLOSURE
19 REQUIRED BY THE STATE OF ILLINOIS." Under the title shall
20 appear the statement in at least 10-point bold type that "THE
21 REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE
22 APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE STATE OF
23 ILLINOIS. THE INFORMATION CONTAINED IN THIS DISCLOSURE

 

 

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1 DOCUMENT HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY
2 QUESTIONS OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL
3 ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE
4 TO BE PROVIDED 14 10 BUSINESS DAYS TO REVIEW THIS DOCUMENT
5 BEFORE SIGNING ANY CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT
6 TO THE SELLER OR THE SELLER'S REPRESENTATIVE". The seller's
7 name and principal business address, along with the date of the
8 disclosure document shall also be provided on the cover sheet.
9 No other information shall appear on the cover sheet. The
10 disclosure document shall contain the following information
11 unless the seller uses a disclosure document as provided in
12 paragraph (1) or (2) of subsection (a) of Section 5-30 of this
13 Law:
14         (1) The names and residential addresses of those
15     salespersons who will engage in the offer or sale of the
16     business opportunity in this State.
17         (2) The name of the seller, whether the seller is doing
18     business as an individual, partnership or corporation; the
19     names under which the seller has conducted, is conducting
20     or intends to conduct business; and the name of any parent
21     or affiliated company that will engage in business
22     transactions with purchasers or which will take
23     responsibility for statements made by the seller.
24         (3) The names, addresses and titles of the seller's
25     officers, directors, trustees, general managers, principal
26     executives, agents, and any other persons charged with

 

 

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1     responsibility for the seller's business activities
2     relating to the sale of the business opportunity.
3         (4) Prior business experience of the seller relating to
4     business opportunities including:
5             (A) The name, address, and a description of any
6         business opportunity previously offered by the seller;
7             (B) The length of time the seller has offered each
8         such business opportunity; and
9             (C) The length of time the seller has conducted the
10         business opportunity currently being offered to the
11         purchaser.
12         (5) With respect to persons identified in item (3) of
13     this subsection:
14             (A) A description of the persons' business
15         experience for the 10 year period preceding the filing
16         date of this disclosure document. The description of
17         business experience shall list principal occupations
18         and employers; and
19             (B) A listing of the persons' educational and
20         professional backgrounds including, the names of
21         schools attended and degrees received, and any other
22         information that will demonstrate sufficient knowledge
23         and experience to perform the services proposed.
24         (6) Whether the seller or any person identified in item
25     (3) of this subsection:
26             (A) Has been convicted of any felony, or pleaded

 

 

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1         nolo contendere to a felony charge, or has been the
2         subject of any criminal, civil or administrative
3         proceedings alleging the violation of any business
4         opportunity law, securities law, commodities law,
5         franchise law, fraud or deceit, embezzlement,
6         fraudulent conversion, restraint of trade, unfair or
7         deceptive practices, misappropriation of property or
8         comparable allegations;
9             (B) Has filed in bankruptcy, been adjudged
10         bankrupt, been reorganized due to insolvency, or was an
11         owner, principal officer or general partner or any
12         other person that has so filed or was so adjudged or
13         reorganized during or within the last 7 years.
14         (7) The name of the person identified in item (6) of
15     this subsection, nature of and parties to the action or
16     proceeding, court or other forum, date of the institution
17     of the action, docket references to the action, current
18     status of the action or proceeding, terms and conditions or
19     any order or decree, the penalties or damages assessed and
20     terms of settlement.
21         (8) The initial payment required, or when the exact
22     amount cannot be determined, a detailed estimate of the
23     amount of the initial payment to be made to the seller.
24         (9) A detailed description of the actual services the
25     seller agrees to perform for the purchaser.
26         (10) A detailed description of any training the seller

 

 

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1     agrees to provide for the purchaser.
2         (11) A detailed description of services the seller
3     agrees to perform in connection with the placement of
4     equipment, products or supplies at a location, as well as
5     any agreement necessary in order to locate or operate
6     equipment, products or supplies on a premises neither owned
7     nor leased by the purchaser or seller.
8         (12) A detailed description of any license or permit
9     that will be necessary in order for the purchaser to engage
10     in or operate the business opportunity.
11         (13) The business opportunity seller that is required
12     to secure a bond under Section 5-50 of this Law, shall
13     state in the disclosure document "As required by the State
14     of Illinois, the seller has secured a bond issued by
15     (insert name and address of surety company), a surety
16     company, authorized to do business in this State. Before
17     signing a contract or agreement to purchase this business
18     opportunity, you should check with the surety company to
19     determine the bond's current status.".
20         (14) Any representations made by the seller to the
21     purchaser concerning sales or earnings that may be made
22     from this business opportunity, including, but not limited
23     to:
24             (A) The bases or assumptions for any actual,
25         average, projected or forecasted sales, profits,
26         income or earnings;

 

 

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1             (B) The total number of purchasers who, within a
2         period of 3 years of the date of the disclosure
3         document, purchased a business opportunity involving
4         the product, equipment, supplies or services being
5         offered to the purchaser; and
6             (C) The total number of purchasers who, within 3
7         years of the date of the disclosure document, purchased
8         a business opportunity involving the product,
9         equipment, supplies or services being offered to the
10         purchaser who, to the seller's knowledge, have
11         actually received earnings in the amount or range
12         specified.
13         (15) Any seller who makes a guarantee to a purchaser
14     shall give a detailed description of the elements of the
15     guarantee. Such description shall include, but shall not be
16     limited to, the duration, terms, scope, conditions and
17     limitations of the guarantee.
18         (16) A statement of:
19             (A) The total number of business opportunities
20         that are the same or similar in nature to those that
21         have been sold or organized by the seller;
22             (B) The names and addresses of purchasers who have
23         requested a refund or rescission from the seller within
24         the last 12 months and the number of those who have
25         received the refund or rescission; and
26             (C) The total number of business opportunities the

 

 

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1         seller intends to sell in this State within the next 12
2         months.
3         (17) A statement describing any contractual
4     restrictions, prohibitions or limitations on the
5     purchaser's conduct. Attach a copy of all business
6     opportunity and other contracts or agreements proposed for
7     use or in use in this State including, without limitation,
8     all lease agreements, option agreements, and purchase
9     agreements.
10         (18) The rights and obligations of the seller and the
11     purchaser regarding termination of the business
12     opportunity contract or agreement.
13         (19) A statement accurately describing the grounds
14     upon which the purchaser may initiate legal action to
15     terminate the business opportunity contract or agreement.
16         (20) A copy of the most recent audited financial
17     statement of the seller, prepared within 13 months of the
18     first offer in this State, together with a statement of any
19     material changes in the financial condition of the seller
20     from that date. The Secretary of State may accept the
21     filing of a reviewed financial statement in lieu of an
22     audited financial statement.
23         (21) A list of the states in which this business
24     opportunity is registered.
25         (22) A list of the states in which this disclosure
26     document is on file.

 

 

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1         (23) A list of the states which have denied, suspended
2     or revoked the registration of this business opportunity.
3         (24) A section entitled "Risk Factors" containing a
4     series of short concise statements summarizing the
5     principal factors which make this business opportunity a
6     high risk or one of a speculative nature. Each statement
7     shall include a cross-reference to the page on which
8     further information regarding that risk factor can be found
9     in the disclosure document.
10         (25) Any additional information as the Secretary of
11     State may require by rule, regulation, or order.
12 (Source: P.A. 96-648, eff. 10-1-09.)
 
13     Section 99. Effective date. This Act takes effect upon
14 becoming law.