97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB2104

 

Introduced 2/22/2011, by Rep. Chapin Rose

 

SYNOPSIS AS INTRODUCED:
 
805 ILCS 180/1-25
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. Also amends the Limited Liability Company Act. Provides that a limited liability company may be formed for the purpose of practicing medicine if, among other conditions, each member is a hospital affiliate as defined in the Hospital Licensing Act. Effective immediately.


LRB097 05288 AEK 45342 b

 

 

A BILL FOR

 

HB2104LRB097 05288 AEK 45342 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 3. The Limited Liability Company Act is amended by
5changing Section 1-25 as follows:
 
6    (805 ILCS 180/1-25)
7    Sec. 1-25. Nature of business. A limited liability company
8may be formed for any lawful purpose or business except:
9        (1) (blank);
10        (2) insurance unless, for the purpose of carrying on
11    business as a member of a group including incorporated and
12    individual unincorporated underwriters, the Director of
13    Insurance finds that the group meets the requirements of
14    subsection (3) of Section 86 of the Illinois Insurance Code
15    and the limited liability company, if insolvent, is subject
16    to liquidation by the Director of Insurance under Article
17    XIII of the Illinois Insurance Code;
18        (3) the practice of dentistry unless all the members
19    and managers are licensed as dentists under the Illinois
20    Dental Practice Act; or
21        (4) the practice of medicine unless all the managers,
22    if any, are licensed to practice medicine under the Medical
23    Practice Act of 1987 and each member is either:

 

 

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1            (A) licensed to practice medicine under the
2        Medical Practice Act of 1987; or
3            (B) a registered medical corporation or
4        corporations organized pursuant to the Medical
5        Corporation Act; or
6            (C) a professional corporation organized pursuant
7        to the Professional Service Corporation Act of
8        physicians licensed to practice under the Medical
9        Practice Act of 1987; or
10            (D) a hospital affiliate as defined in Section 10.8
11        of the Hospital Licensing Act; or
12            (E) (D) a limited liability company that satisfies
13        the requirements of subparagraph (A), (B), or (C), or
14        (D).
15(Source: P.A. 95-331, eff. 8-21-07; 95-738, eff. 1-1-09.)
 
16    Section 5. The Business Opportunity Sales Law of 1995 is
17amended by changing Section 5-35 as follows:
 
18    (815 ILCS 602/5-35)
19    Sec. 5-35. Disclosure requirements.
20    (a) It shall be unlawful for any person to offer or, sell
21any business opportunity required to be registered under this
22Law unless a written disclosure document as filed under
23subsection (a) of Section 5-30 of this Law is delivered to each
24purchaser at least 14 days prior to the execution by a

 

 

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1purchaser of any contract or agreement imposing a binding legal
2obligation on the purchaser or the payment by a purchaser of
3any consideration in connection with the offer or sale of the
4business opportunity.
5    (b) The disclosure document shall have a cover sheet which
6is entitled, in at least 10-point bold type, "DISCLOSURE
7REQUIRED BY THE STATE OF ILLINOIS." Under the title shall
8appear the statement in at least 10-point bold type that "THE
9REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE
10APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE STATE OF
11ILLINOIS. THE INFORMATION CONTAINED IN THIS DISCLOSURE
12DOCUMENT HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY
13QUESTIONS OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL
14ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE
15TO BE PROVIDED 14 10 BUSINESS DAYS TO REVIEW THIS DOCUMENT
16BEFORE SIGNING ANY CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT
17TO THE SELLER OR THE SELLER'S REPRESENTATIVE". The seller's
18name and principal business address, along with the date of the
19disclosure document shall also be provided on the cover sheet.
20No other information shall appear on the cover sheet. The
21disclosure document shall contain the following information
22unless the seller uses a disclosure document as provided in
23paragraph (1) or (2) of subsection (a) of Section 5-30 of this
24Law:
25        (1) The names and residential addresses of those
26    salespersons who will engage in the offer or sale of the

 

 

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1    business opportunity in this State.
2        (2) The name of the seller, whether the seller is doing
3    business as an individual, partnership or corporation; the
4    names under which the seller has conducted, is conducting
5    or intends to conduct business; and the name of any parent
6    or affiliated company that will engage in business
7    transactions with purchasers or which will take
8    responsibility for statements made by the seller.
9        (3) The names, addresses and titles of the seller's
10    officers, directors, trustees, general managers, principal
11    executives, agents, and any other persons charged with
12    responsibility for the seller's business activities
13    relating to the sale of the business opportunity.
14        (4) Prior business experience of the seller relating to
15    business opportunities including:
16            (A) The name, address, and a description of any
17        business opportunity previously offered by the seller;
18            (B) The length of time the seller has offered each
19        such business opportunity; and
20            (C) The length of time the seller has conducted the
21        business opportunity currently being offered to the
22        purchaser.
23        (5) With respect to persons identified in item (3) of
24    this subsection:
25            (A) A description of the persons' business
26        experience for the 10 year period preceding the filing

 

 

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1        date of this disclosure document. The description of
2        business experience shall list principal occupations
3        and employers; and
4            (B) A listing of the persons' educational and
5        professional backgrounds including, the names of
6        schools attended and degrees received, and any other
7        information that will demonstrate sufficient knowledge
8        and experience to perform the services proposed.
9        (6) Whether the seller or any person identified in item
10    (3) of this subsection:
11            (A) Has been convicted of any felony, or pleaded
12        nolo contendere to a felony charge, or has been the
13        subject of any criminal, civil or administrative
14        proceedings alleging the violation of any business
15        opportunity law, securities law, commodities law,
16        franchise law, fraud or deceit, embezzlement,
17        fraudulent conversion, restraint of trade, unfair or
18        deceptive practices, misappropriation of property or
19        comparable allegations;
20            (B) Has filed in bankruptcy, been adjudged
21        bankrupt, been reorganized due to insolvency, or was an
22        owner, principal officer or general partner or any
23        other person that has so filed or was so adjudged or
24        reorganized during or within the last 7 years.
25        (7) The name of the person identified in item (6) of
26    this subsection, nature of and parties to the action or

 

 

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1    proceeding, court or other forum, date of the institution
2    of the action, docket references to the action, current
3    status of the action or proceeding, terms and conditions or
4    any order or decree, the penalties or damages assessed and
5    terms of settlement.
6        (8) The initial payment required, or when the exact
7    amount cannot be determined, a detailed estimate of the
8    amount of the initial payment to be made to the seller.
9        (9) A detailed description of the actual services the
10    seller agrees to perform for the purchaser.
11        (10) A detailed description of any training the seller
12    agrees to provide for the purchaser.
13        (11) A detailed description of services the seller
14    agrees to perform in connection with the placement of
15    equipment, products or supplies at a location, as well as
16    any agreement necessary in order to locate or operate
17    equipment, products or supplies on a premises neither owned
18    nor leased by the purchaser or seller.
19        (12) A detailed description of any license or permit
20    that will be necessary in order for the purchaser to engage
21    in or operate the business opportunity.
22        (13) The business opportunity seller that is required
23    to secure a bond under Section 5-50 of this Law, shall
24    state in the disclosure document "As required by the State
25    of Illinois, the seller has secured a bond issued by
26    (insert name and address of surety company), a surety

 

 

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1    company, authorized to do business in this State. Before
2    signing a contract or agreement to purchase this business
3    opportunity, you should check with the surety company to
4    determine the bond's current status.".
5        (14) Any representations made by the seller to the
6    purchaser concerning sales or earnings that may be made
7    from this business opportunity, including, but not limited
8    to:
9            (A) The bases or assumptions for any actual,
10        average, projected or forecasted sales, profits,
11        income or earnings;
12            (B) The total number of purchasers who, within a
13        period of 3 years of the date of the disclosure
14        document, purchased a business opportunity involving
15        the product, equipment, supplies or services being
16        offered to the purchaser; and
17            (C) The total number of purchasers who, within 3
18        years of the date of the disclosure document, purchased
19        a business opportunity involving the product,
20        equipment, supplies or services being offered to the
21        purchaser who, to the seller's knowledge, have
22        actually received earnings in the amount or range
23        specified.
24        (15) Any seller who makes a guarantee to a purchaser
25    shall give a detailed description of the elements of the
26    guarantee. Such description shall include, but shall not be

 

 

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1    limited to, the duration, terms, scope, conditions and
2    limitations of the guarantee.
3        (16) A statement of:
4            (A) The total number of business opportunities
5        that are the same or similar in nature to those that
6        have been sold or organized by the seller;
7            (B) The names and addresses of purchasers who have
8        requested a refund or rescission from the seller within
9        the last 12 months and the number of those who have
10        received the refund or rescission; and
11            (C) The total number of business opportunities the
12        seller intends to sell in this State within the next 12
13        months.
14        (17) A statement describing any contractual
15    restrictions, prohibitions or limitations on the
16    purchaser's conduct. Attach a copy of all business
17    opportunity and other contracts or agreements proposed for
18    use or in use in this State including, without limitation,
19    all lease agreements, option agreements, and purchase
20    agreements.
21        (18) The rights and obligations of the seller and the
22    purchaser regarding termination of the business
23    opportunity contract or agreement.
24        (19) A statement accurately describing the grounds
25    upon which the purchaser may initiate legal action to
26    terminate the business opportunity contract or agreement.

 

 

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1        (20) A copy of the most recent audited financial
2    statement of the seller, prepared within 13 months of the
3    first offer in this State, together with a statement of any
4    material changes in the financial condition of the seller
5    from that date. The Secretary of State may accept the
6    filing of a reviewed financial statement in lieu of an
7    audited financial statement.
8        (21) A list of the states in which this business
9    opportunity is registered.
10        (22) A list of the states in which this disclosure
11    document is on file.
12        (23) A list of the states which have denied, suspended
13    or revoked the registration of this business opportunity.
14        (24) A section entitled "Risk Factors" containing a
15    series of short concise statements summarizing the
16    principal factors which make this business opportunity a
17    high risk or one of a speculative nature. Each statement
18    shall include a cross-reference to the page on which
19    further information regarding that risk factor can be found
20    in the disclosure document.
21        (25) Any additional information as the Secretary of
22    State may require by rule, regulation, or order.
23(Source: P.A. 96-648, eff. 10-1-09.)
 
24    Section 99. Effective date. This Act takes effect upon
25becoming law.