Full Text of SB1285 96th General Assembly
SB1285ham001 96TH GENERAL ASSEMBLY
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Judiciary I - Civil Law Committee
Filed: 4/29/2009
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| AMENDMENT TO SENATE BILL 1285
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| AMENDMENT NO. ______. Amend Senate Bill 1285 by replacing | 3 |
| everything after the enacting clause with the following:
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| "Section 5. The General Not For Profit Corporation Act of | 5 |
| 1986 is amended by changing Section 107.50 as follows:
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| (805 ILCS 105/107.50) (from Ch. 32, par. 107.50)
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| Sec. 107.50. Proxies. A member entitled to vote may
vote in | 8 |
| person or, unless the articles of incorporation or
the bylaws | 9 |
| otherwise provide, by proxy executed in writing
by the member | 10 |
| or by that member's duly authorized attorney-in-fact.
No proxy | 11 |
| shall be valid after 11 months from the
date of its execution, | 12 |
| unless otherwise provided in the
proxy. Where directors , or | 13 |
| officers , or representatives are to be elected by
members, the | 14 |
| bylaws may provide that such elections may be
conducted by | 15 |
| mail , email, or other electronic means .
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| (Source: P.A. 84-1423.)
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| Section 10. The Illinois Business Brokers Act of 1995 is | 2 |
| amended by changing Section 10-80 as follows:
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| (815 ILCS 307/10-80)
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| Sec. 10-80.
Persons exempt from registration and other
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| duties under law; burden of proof thereof.
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| (a) The following persons are exempt from the
requirements | 7 |
| of this Act:
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| (1) Any attorney who is licensed to practice in this | 9 |
| State, while
engaged in the practice of law
and whose | 10 |
| service in relation to the business broker transaction is
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| incidental to the attorney's practice.
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| (2) Any person licensed as a real estate broker or | 13 |
| salesperson under the
Illinois Real Estate License Act of | 14 |
| 2000 who is primarily engaged
in business
activities for | 15 |
| which a license is required under that Act and who, on an
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| incidental basis, acts as a business broker.
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| (3) Any dealer, salesperson, or investment adviser | 18 |
| registered pursuant
to the Illinois
Securities Law of 1953 | 19 |
| or any investment adviser
representative, or any person who | 20 |
| is regularly engaged in the business of
offering or selling | 21 |
| securities in a transaction exempted under subsection C, H,
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| M, R, Q, or S of Section 4 of the Illinois Securities Law | 23 |
| of 1953 or subsection
G of Section 4 of the Illinois | 24 |
| Securities Law of 1953 provided that such person
is |
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| registered pursuant to federal securities law.
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| (4) An associated person described in subdivision | 3 |
| (h)(2) of Section 15
of the Federal 1934 Act.
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| (5) An investment adviser registered pursuant to | 5 |
| Section 203 of the
Federal 1940 Investment Advisors Act.
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| (6) A person described in subdivision (a)(11) of | 7 |
| Section 202 of the
Federal 1940 Investment Advisors Act.
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| (7) Any person who is selling a business owned or | 9 |
| operated (in whole or
in part) by that person in a one time | 10 |
| transaction.
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| (b) This Act shall not be deemed to apply in any manner, | 12 |
| directly or
indirectly, to: (i) a State bank or national bank, | 13 |
| as those terms are defined
in the Illinois Banking Act, or any | 14 |
| subsidiary of a State bank or national
bank;
(ii) a bank | 15 |
| holding company, as that term is defined in the Illinois Bank
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| Holding Company Act of 1957, or any subsidiary of a bank | 17 |
| holding company; (iii)
a foreign banking corporation, as that | 18 |
| term is defined in the Foreign Banking
Office Act, or any | 19 |
| subsidiary of a foreign banking corporation; (iv) a
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| representative office, as that term is defined in the Foreign | 21 |
| Bank
Representative Office Act; (v) a corporate fiduciary, as | 22 |
| that term is defined
in the Corporate Fiduciary Act, or any | 23 |
| subsidiary of a corporate fiduciary;
(vi) a savings bank | 24 |
| organized under the Savings Bank Act, or a federal savings
bank | 25 |
| organized under federal law, or any subsidiary of a savings | 26 |
| bank or
federal savings bank; (vii) a savings bank holding |
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| company organized under the
Savings Bank Act, or any subsidiary | 2 |
| of a savings bank holding company; (viii)
an association or | 3 |
| federal association, as those terms are defined in the
Illinois | 4 |
| Savings and Loan Act of 1985, or any subsidiary of an | 5 |
| association or
federal association; (ix) a foreign savings and | 6 |
| loan association or foreign
savings bank subject to the | 7 |
| Illinois Savings and Loan Act of 1985, or any
subsidiary of a | 8 |
| foreign savings and loan association or foreign savings bank;
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| or (x) a savings and loan association holding company, as that | 10 |
| term is defined
in the Illinois Savings and Loan Act of 1985, | 11 |
| or any subsidiary of a savings
and loan association holding | 12 |
| company.
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| (b-1) Any franchise seller as defined in the Federal Trade | 14 |
| Commission rule entitled Disclosure Requirements and | 15 |
| Prohibitions Concerning Franchising, 16 C.F.R. Part 436, as it | 16 |
| may be amended, is exempt from the requirements of this Act. | 17 |
| Persons registered under the Illinois Franchise Disclosure Act
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| of 1987 (and their employees) are exempt from the requirements | 19 |
| of this Act as
to: offers and sales in connection with | 20 |
| franchising activities; or
assisting any of their franchisees | 21 |
| in the offer or sale of a franchise by any
such franchisee for | 22 |
| the franchisee's own account regardless of whether the sale
is | 23 |
| effected by or through the registered persons.
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| (b-2) Any certified public accountant licensed to practice | 25 |
| in Illinois,
while engaged in the practice as a certified | 26 |
| public accountant and whose
service in relation to the business |
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| broker transaction is incidental to his or
her practice, is | 2 |
| exempt from the requirements of this Act.
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| (b-3) Any publisher, or regular employee of such publisher, | 4 |
| of a bona fide
newspaper or news magazine of regular and | 5 |
| established paid circulation who, in
the routine course of | 6 |
| selling advertising, advertises businesses for sale and
in | 7 |
| which no other related services are provided is exempt from the | 8 |
| requirements
of this Act.
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| (c) The burden of proof of any exemption or
classification | 10 |
| provided in this Act shall be on the party
claiming the | 11 |
| exemption or classification.
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| (Source: P.A. 90-70, eff. 7-8-97; 91-245, eff. 12-31-99.)
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| Section 15. The Business Opportunity Sales Law of 1995 is | 14 |
| amended by changing Sections 5-10, 5-30 and 5-35 as follows:
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| (815 ILCS 602/5-10)
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| Sec. 5-10. Exemptions. Registration pursuant to Section | 17 |
| 5-30
shall not apply to any of the
following:
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| (a) Any offer or sale of a business opportunity for which
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| the immediate cash payment made by the purchaser for any
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| business opportunity is at least $25,000 if the immediate cash
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| payment does not exceed 20% of the purchaser's net worth as
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| determined exclusive of principal residence, furnishings
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| therein, and automobiles; provided, however, the Secretary of
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| State may by rule or regulation withdraw or further condition
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| the availability of this exemption.
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| (b) Any offer or sale of a business opportunity which
the | 3 |
| seller does not advertise, solicit, or sell for an initial | 4 |
| payment to the seller or a
person recommended by the seller | 5 |
| exceeding $500.
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| (c) Any offer or sale of a business opportunity where the
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| seller has a net worth of not less than $1,000,000 as | 8 |
| determined
on the basis of the seller's most recent audited | 9 |
| financial
statement, prepared within 13 months of the first | 10 |
| offer in this
State. Net worth may be determined on a | 11 |
| consolidated basis where
the seller is at least 80% owned by | 12 |
| one person and that person
expressly guarantees the obligations | 13 |
| of the seller with regard
to the offer or sale of any business | 14 |
| opportunity claimed to be
exempt under this subsection. The | 15 |
| Secretary of State may by rule
or regulation withdraw or | 16 |
| further condition the availability of
this exemption.
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| (d) Any offer or sale of a business opportunity where the
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| purchaser has a net worth of not less than $250,000. Net worth
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| shall be determined exclusive of principal residence,
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| furnishings therein, and automobiles. The Secretary of State | 21 |
| may
by rule or regulation withdraw or further condition the
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| availability of this exemption.
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| (e) Any offer or sale of a business opportunity where the
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| purchaser is a bank, savings and loan association, trust
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| company, insurance company, credit union, or investment | 26 |
| company
as defined by the federal Investment Company Act of |
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| 1940,
pension or profit sharing trust, or other financial | 2 |
| institution
or institutional buyer, or a dealer registered | 3 |
| under the
Illinois Securities Law of 1953,
where the purchaser | 4 |
| is acting for itself or in a fiduciary
capacity.
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| (f) Any offer or sale of a business opportunity which is
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| defined as a franchise under the Franchise Disclosure Act of | 7 |
| 1987 provided that
the seller delivers to each purchaser 14 at | 8 |
| the earlier of the
first personal meeting, or 10 business days | 9 |
| prior to the earlier
of the execution by a purchaser of any | 10 |
| contract or agreement
imposing a binding legal obligation on | 11 |
| the purchaser or the
payment by a purchaser of any | 12 |
| consideration in connection with
the offer or sale of the | 13 |
| business opportunity, a disclosure document prepared in | 14 |
| accordance with the requirements of Section 16 of the Illinois | 15 |
| Franchise Disclosure Act of 1987, as it may be amended. one of | 16 |
| the
following disclosure documents:
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| (1) The Franchise Offering Circular provided for under
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| the Franchise Disclosure Act of 1987 which the Secretary of | 19 |
| State may
adopt by rule or regulation; or
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| (2) A disclosure document prepared pursuant to the
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| Federal Trade Commission rule entitled Disclosure
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| Requirements and Prohibitions Concerning Franchising and
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| Business Opportunity Ventures, 16 C.F.R. Sec. 436 (1979).
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| For the purposes of this subsection, a personal meeting
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| shall mean a face-to-face meeting between the purchaser and | 26 |
| the
seller or their representatives, which is held for the |
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| purpose
of discussing the offer or sale of a business | 2 |
| opportunity.
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| (g) Any offer or sale of a business opportunity for which
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| the cash payment required to be made by a purchaser for any | 5 |
| business
opportunity does not exceed $500 and the payment is | 6 |
| made for the
not-for-profit sale of sales demonstration | 7 |
| equipment, material,
or samples or the payment is made for | 8 |
| product inventory sold to
the purchaser at a bona fide | 9 |
| wholesale price.
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| (h) Any offer or sale of a business opportunity which the
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| Secretary of State exempts by order or a class of business
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| opportunities which the Secretary of State exempts by rule or
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| regulation upon the finding that such exemption would not be
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| contrary to public interest and that registration would not be
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| necessary or appropriate for the protection of purchasers.
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| (Source: P.A. 91-809, eff. 1-1-01.)
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| (815 ILCS 602/5-30)
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| Sec. 5-30. Registration.
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| (a) In order to register a business opportunity, the seller
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| shall file with the Secretary of State one of the following
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| disclosure documents with the appropriate cover sheet as
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| required by subsection (b) of Section 5-35 of this Law, a | 23 |
| consent to service of
process as specified in subsection (b) of | 24 |
| this Section, and the
appropriate fee as required by subsection | 25 |
| (c) of this Section
which is not returnable in any event:
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| (1) The Business Opportunity Disclosure Document | 2 |
| Franchise Offering Circular which the
Secretary of State | 3 |
| may prescribe by rule or regulation; or
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| (2) A disclosure document prepared pursuant to the
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| Federal Trade Commission rule entitled Disclosure
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| Requirements and Prohibitions Concerning Franchising , 16 | 7 |
| C.F.R. Part 436, or the Federal Trade Commission rule | 8 |
| entitled Disclosure Requirements and Prohibitions | 9 |
| Concerning Business Opportunities, 16 C.F.R. Part 437, as | 10 |
| they may be amended and
Business Opportunity Venture, 16 | 11 |
| C.F.R. Sec. 436 (1979). The
Secretary of State may by rule | 12 |
| or regulation adopt any
amendment to the disclosure | 13 |
| document prepared pursuant to 16
C.F.R. Sec. 436 (1979), | 14 |
| that has been adopted by the Federal
Trade Commission ; or
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| (3) A disclosure document prepared pursuant to | 16 |
| subsection (b) of Section
5-35 of this Law.
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| (b) Every seller shall file, in the form as the Secretary
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| of State may prescribe, an irrevocable consent appointing the
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| Secretary of State or the successor in office to be the | 20 |
| seller's
attorney to receive service of any lawful process in | 21 |
| any
noncriminal suit, action or proceeding against the seller | 22 |
| or the
seller's successor, executor or administrator which | 23 |
| arises under
this Law after the consent has been filed, with | 24 |
| the same force
and validity as if served personally on the | 25 |
| person filing the
consent. Service may be made by delivering a | 26 |
| copy of the process
in the office of the Secretary of State, |
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| but is not effective
unless the plaintiff or petitioner in a | 2 |
| suit, action or
proceeding, forthwith sends notice of the | 3 |
| service and a copy of
the process by registered or certified | 4 |
| mail, return receipt
requested, to the defendant's or | 5 |
| respondent's most current
address on file with the Secretary of | 6 |
| State, and the plaintiff's
affidavit of compliance with this | 7 |
| subsection is filed in the
case on or before the return date of | 8 |
| the process, if any, or
within such further time as the court | 9 |
| allows.
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| (c)(1) The Secretary of State shall by rule or regulation
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| impose and shall collect fees necessary for the | 12 |
| administration
of this Law including, but not limited to, | 13 |
| fees for the
following purposes:
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| (A) filing a disclosure document and renewal fee;
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| (B) interpretive opinion fee;
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| (C) acceptance of service of process pursuant to | 17 |
| subsection (b) of
Section 5-145;
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| (D) issuance of certification pursuant to Section | 19 |
| 5-20; or
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| (E) late registration fee pursuant to Section | 21 |
| 5-30(g).
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| (2) The Secretary of State may, by rule or regulation,
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| raise or lower any fee imposed by, and which he or she is
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| authorized by law to collect under this Law.
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| (d) A registration automatically becomes effective upon
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| the expiration of the 10th full business day after a complete
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| filing, provided that no order has been issued or proceeding
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| pending under Section 5-45 of this Law. The Secretary of State | 3 |
| may
by order waive or reduce the time period prior to | 4 |
| effectiveness,
provided that a complete filing has been made. | 5 |
| The Secretary of
State may by order defer the effective date | 6 |
| until the expiration
of the 10th full business day after the | 7 |
| filing of any amendment.
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| (e) The registration is effective for one year commencing | 9 |
| on
the date of effectiveness and may be renewed annually upon | 10 |
| the
filing of a current disclosure document accompanied by any
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| documents or information that the Secretary of State may by | 12 |
| rule
or regulation or order require. The annual renewal fee | 13 |
| shall be
in the same amount as the initial registration fee as
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| established under subsection (c) of Section 5-30 of this Law | 15 |
| which shall not be
returnable in any event. Failure to renew | 16 |
| upon the close of the
one year period of effectiveness will | 17 |
| result in expiration of the
registration. The Secretary of | 18 |
| State may by rule or regulation
or order require the filing of | 19 |
| a sales report.
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| (f) The Secretary of State may by rule or regulation or
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| order require the filing of all proposed literature or
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| advertising prior to its use.
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| (g) Notwithstanding the foregoing, applications for | 24 |
| renewal of
registration of business opportunities may be filed | 25 |
| within 30 days following
the expiration of the registration | 26 |
| provided that the applicant pays the annual
registration fee |
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| together with an additional amount equal to the annual
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| registration fee and files any other information or documents | 3 |
| that the
Secretary of State
may prescribe by rule or order. Any | 4 |
| application filed within 30 days
following the expiration of | 5 |
| the registration shall be automatically effective
as of the | 6 |
| time of the earlier expiration provided that the proper fee has | 7 |
| been
paid to the Secretary of State.
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| (Source: P.A. 92-308, eff. 1-1-02.)
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| (815 ILCS 602/5-35)
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| Sec. 5-35. Disclosure requirements.
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| (a) It shall be unlawful for any person to offer or, sell
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| any business opportunity required to be registered under this
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| Law unless a written disclosure document as filed under | 14 |
| subsection (a) of
Section
5-30 of this Law is delivered to each | 15 |
| purchaser at least 14 10
business days prior to the execution | 16 |
| by a purchaser of any
contract or agreement imposing a binding | 17 |
| legal obligation on the
purchaser or the payment by a purchaser | 18 |
| of any consideration in
connection with the offer or sale of | 19 |
| the business opportunity.
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| (b) The disclosure document shall have a cover sheet which
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| is entitled, in at least 10-point bold type, "DISCLOSURE
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| REQUIRED BY THE STATE OF ILLINOIS." Under the title shall | 23 |
| appear
the statement in at least 10-point bold type that "THE
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| REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE
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| APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE STATE OF
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| ILLINOIS. THE INFORMATION CONTAINED IN THIS DISCLOSURE | 2 |
| DOCUMENT
HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY | 3 |
| QUESTIONS
OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL | 4 |
| ADVICE
BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE | 5 |
| TO BE
PROVIDED 10 BUSINESS DAYS TO REVIEW THIS DOCUMENT BEFORE | 6 |
| SIGNING
ANY CONTRACT OR AGREEMENT OR MAKING ANY PAYMENT TO THE | 7 |
| SELLER OR
THE SELLER'S REPRESENTATIVE". The seller's name and | 8 |
| principal
business address, along with the date of the | 9 |
| disclosure document
shall also be provided on the cover sheet. | 10 |
| No other information
shall appear on the cover sheet. The | 11 |
| disclosure document shall
contain the following information | 12 |
| unless the seller uses a
disclosure document as provided in | 13 |
| paragraph (1) or (2) of subsection (a) of
Section 5-30
of this | 14 |
| Law:
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| (1) The names and residential addresses of those
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| salespersons who will engage in the offer or sale of the
| 17 |
| business opportunity in this State.
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| (2) The name of the seller, whether the seller is
doing | 19 |
| business as an individual, partnership or corporation;
the | 20 |
| names under which the seller has conducted, is
conducting | 21 |
| or intends to conduct business; and the name of
any parent | 22 |
| or affiliated company that will engage in
business | 23 |
| transactions with purchasers or which will take
| 24 |
| responsibility for statements made by the seller.
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| (3) The names, addresses and titles of the seller's
| 26 |
| officers, directors, trustees, general managers, principal
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| executives, agents, and any other persons charged with
| 2 |
| responsibility for the seller's business activities | 3 |
| relating
to the sale of the business opportunity.
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| (4) Prior business experience of the seller relating
to | 5 |
| business opportunities including:
| 6 |
| (A) The name, address, and a description of any
| 7 |
| business opportunity previously offered by the seller;
| 8 |
| (B) The length of time the seller has offered
each | 9 |
| such business opportunity; and
| 10 |
| (C) The length of time the seller has conducted
the | 11 |
| business opportunity currently being offered to the
| 12 |
| purchaser.
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| (5) With respect to persons identified in item (3) of | 14 |
| this subsection:
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| (A) A description of the persons' business
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| experience for the 10 year period preceding the filing
| 17 |
| date of this disclosure document. The description of
| 18 |
| business experience shall list principal occupations
| 19 |
| and employers; and
| 20 |
| (B) A listing of the persons' educational and
| 21 |
| professional backgrounds including, the names of
| 22 |
| schools attended and degrees received, and any other
| 23 |
| information that will demonstrate sufficient knowledge
| 24 |
| and experience to perform the services proposed.
| 25 |
| (6) Whether the seller or any person identified in
item | 26 |
| (3) of this subsection:
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| (A) Has been convicted of any felony, or pleaded
| 2 |
| nolo contendere to a felony charge, or has been the
| 3 |
| subject of any criminal, civil or administrative
| 4 |
| proceedings alleging the violation of any business
| 5 |
| opportunity law, securities law, commodities law,
| 6 |
| franchise law, fraud or deceit, embezzlement,
| 7 |
| fraudulent conversion, restraint of trade, unfair or
| 8 |
| deceptive practices, misappropriation of property or
| 9 |
| comparable allegations;
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| (B) Has filed in bankruptcy, been adjudged
| 11 |
| bankrupt, been reorganized due to insolvency, or was an
| 12 |
| owner, principal officer or general partner or any
| 13 |
| other person that has so filed or was so adjudged or
| 14 |
| reorganized during or within the last 7 years.
| 15 |
| (7) The name of the person identified in item (6) of | 16 |
| this
subsection, nature of and parties to
the action or | 17 |
| proceeding, court or other forum, date of the
institution | 18 |
| of the action, docket references to the action,
current | 19 |
| status of the action or proceeding, terms and
conditions or | 20 |
| any order or decree, the penalties or damages
assessed and | 21 |
| terms of settlement.
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| (8) The initial payment required, or when the exact
| 23 |
| amount cannot be determined, a detailed estimate of the
| 24 |
| amount of the initial payment to be made to the seller.
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| (9) A detailed description of the actual services the
| 26 |
| seller agrees to perform for the purchaser.
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| (10) A detailed description of any training the seller
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| agrees to provide for the purchaser.
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| (11) A detailed description of services the seller
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| agrees to perform in connection with the placement of
| 5 |
| equipment, products or supplies at a location, as well as
| 6 |
| any agreement necessary in order to locate or operate
| 7 |
| equipment, products or supplies on a premises neither owned
| 8 |
| nor leased by the purchaser or seller.
| 9 |
| (12) A detailed description of any license or
permit | 10 |
| that will be necessary in order for the purchaser
to engage | 11 |
| in or operate the business opportunity.
| 12 |
| (13) The business opportunity seller that is required
| 13 |
| to secure a bond under Section 5-50 of this Law, shall
| 14 |
| state in the disclosure document "As required by the State
| 15 |
| of Illinois, the seller has secured a bond issued by | 16 |
| (insert
name and address of surety company), a surety | 17 |
| company,
authorized to do business in this State. Before | 18 |
| signing a
contract or agreement to purchase this business | 19 |
| opportunity,
you should check with the surety company to | 20 |
| determine the
bond's current status.".
| 21 |
| (14) Any representations made by the seller to the
| 22 |
| purchaser concerning sales or earnings that may be made | 23 |
| from
this business opportunity, including, but not limited | 24 |
| to:
| 25 |
| (A) The bases or assumptions for any actual,
| 26 |
| average, projected or forecasted sales, profits, |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
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| 1 |
| income
or earnings;
| 2 |
| (B) The total number of purchasers who, within a
| 3 |
| period of 3 years of the date of the disclosure
| 4 |
| document, purchased a business opportunity involving
| 5 |
| the product, equipment, supplies or services being
| 6 |
| offered to the purchaser; and
| 7 |
| (C) The total number of purchasers who, within 3
| 8 |
| years of the date of the disclosure document, purchased
| 9 |
| a business opportunity involving the product,
| 10 |
| equipment, supplies or services being offered to the
| 11 |
| purchaser who, to the seller's knowledge, have | 12 |
| actually
received earnings in the amount or range | 13 |
| specified.
| 14 |
| (15) Any seller who makes a guarantee to a purchaser
| 15 |
| shall give a detailed description of the elements of the
| 16 |
| guarantee. Such description shall include, but shall not be
| 17 |
| limited to, the duration, terms, scope, conditions and
| 18 |
| limitations of the guarantee.
| 19 |
| (16) A statement of:
| 20 |
| (A) The total number of business opportunities
| 21 |
| that are the same or similar in nature to those that
| 22 |
| have been sold or organized by the seller;
| 23 |
| (B) The names and addresses of purchasers who
have | 24 |
| requested a refund or rescission from the seller
within | 25 |
| the last 12 months and the number of those who
have | 26 |
| received the refund or rescission; and
|
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| (C) The total number of business opportunities
the | 2 |
| seller intends to sell in this State within the
next 12 | 3 |
| months.
| 4 |
| (17) A statement describing any contractual
| 5 |
| restrictions, prohibitions or limitations on the | 6 |
| purchaser's
conduct. Attach a copy of all business | 7 |
| opportunity and other
contracts or agreements proposed for | 8 |
| use or in use in this
State including, without limitation, | 9 |
| all lease agreements,
option agreements, and purchase | 10 |
| agreements.
| 11 |
| (18) The rights and obligations of the seller and the
| 12 |
| purchaser regarding termination of the business | 13 |
| opportunity
contract or agreement.
| 14 |
| (19) A statement accurately describing the grounds | 15 |
| upon
which the purchaser may initiate legal action to | 16 |
| terminate
the business opportunity contract or agreement.
| 17 |
| (20) A copy of the most recent audited financial
| 18 |
| statement of the seller, prepared within 13 months of the
| 19 |
| first offer in this State, together with a statement of any
| 20 |
| material changes in the financial condition of the seller
| 21 |
| from that date. The Secretary of State may accept the | 22 |
| filing of a reviewed
financial statement in lieu of an | 23 |
| audited financial statement.
| 24 |
| (21) A list of the states in which this business
| 25 |
| opportunity is registered.
| 26 |
| (22) A list of the states in which this disclosure
|
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| document is on file.
| 2 |
| (23) A list of the states which have denied, suspended
| 3 |
| or revoked the registration of this business opportunity.
| 4 |
| (24) A section entitled "Risk Factors" containing a
| 5 |
| series of short concise statements summarizing the | 6 |
| principal
factors which make this business opportunity a | 7 |
| high risk or
one of a speculative nature. Each statement | 8 |
| shall include a
cross-reference to the page on which | 9 |
| further information
regarding that risk factor can be found | 10 |
| in the disclosure
document.
| 11 |
| (25) Any additional information as the Secretary of
| 12 |
| State may require by rule, regulation, or order.
| 13 |
| (Source: P.A. 92-308, eff. 1-1-02.)
| 14 |
| Section 20. The Franchise Disclosure Act of 1987 is amended | 15 |
| by changing Sections 3, 7, 8, 10, 11, 15, 16, 21, 22, 26, 29, | 16 |
| 31, and 40 as follows:
| 17 |
| (815 ILCS 705/3) (from Ch. 121 1/2, par. 1703)
| 18 |
| Sec. 3. Definitions. As used in this Act:
| 19 |
| (1) "Franchise" means a contract or agreement, either | 20 |
| expressed or
implied, whether oral or written, between two or | 21 |
| more persons by which:
| 22 |
| (a) a franchisee is granted the right to engage in the | 23 |
| business of
offering, selling, or distributing goods or | 24 |
| services, under a marketing
plan or system prescribed or |
|
|
|
09600SB1285ham001 |
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|
| 1 |
| suggested in substantial part by a franchisor; and
| 2 |
| (b) the operation of the franchisee's business | 3 |
| pursuant to such plan or
system is substantially associated | 4 |
| with the franchisor's trademark, service
mark, trade name, | 5 |
| logotype, advertising, or other commercial symbol
| 6 |
| designating the franchisor or its affiliate; and
| 7 |
| (c) the person granted the right to engage in such | 8 |
| business is required
to pay to the franchisor or an | 9 |
| affiliate of the franchisor , directly or indirectly, a | 10 |
| franchise fee of $500 or more;
| 11 |
| Provided that this Act shall not apply to any of the | 12 |
| following persons,
entities or relationships which may involve | 13 |
| or acquire a franchise or any
interest in a franchise:
| 14 |
| (i) any franchised business which is operated by | 15 |
| the franchisee on the
premises of the franchisor or | 16 |
| subfranchisor as long as such franchised
business is | 17 |
| incidental to the business conducted by the franchisor | 18 |
| or
subfranchisor at such premises, including, without | 19 |
| limitation, leased
departments and concessions; or
| 20 |
| (ii) a fractional franchise. A "fractional | 21 |
| franchise" means any
relationship in which the person | 22 |
| described therein as a franchisee, or any
of the | 23 |
| current directors or executive officers thereof, has | 24 |
| been in the
type of business represented by the | 25 |
| franchise relationship for more than 2
years and the | 26 |
| parties anticipated, or should have anticipated, at |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
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| 1 |
| the time
the agreement establishing the franchise | 2 |
| relationship was reached, that the
sales arising from | 3 |
| the relationship would represent no more than 20% of
| 4 |
| the sales in dollar volume of the franchisee for a | 5 |
| period of at least one
year after the franchisee begins | 6 |
| selling the goods or services involved in
the | 7 |
| franchise; or
| 8 |
| (iii) a franchise agreement for the use of a | 9 |
| trademark, service mark,
trade name, logotype, | 10 |
| advertising, or other commercial symbol designating a
| 11 |
| person who offers on a general basis, for a fee or | 12 |
| otherwise, a bona fide
service for the evaluation, | 13 |
| testing, or certification of goods, commodities,
or | 14 |
| services ; or .
| 15 |
| (iv) a franchise relationship covered by the | 16 |
| Petroleum Marketing Practices Act, 15 U.S.C. 2801. | 17 |
| (2) "Franchisee" means a person to whom a franchise is | 18 |
| granted and
includes, unless stated otherwise in this Act: (a) | 19 |
| a subfranchisor with
regard to its relationship with a | 20 |
| franchisor and (b) a subfranchisee with
regard to its | 21 |
| relationship with a subfranchisor.
| 22 |
| (3) "Franchisor" means a person who grants a franchise and | 23 |
| includes a
subfranchisor with regard to its relationship with a | 24 |
| franchisee, unless
stated otherwise in this Act.
| 25 |
| (4) "Subfranchise" means any contract or agreement between | 26 |
| a franchisor
and a subfranchisor whereby the subfranchisor is |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| granted the right, in
consideration of the payment of a | 2 |
| franchise fee in whole or in part for
such right, to service | 3 |
| franchises or to sell or negotiate the sale of
franchises. | 4 |
| Where used in this Act, unless specifically stated otherwise,
| 5 |
| "franchise" includes "subfranchise."
| 6 |
| (5) "Subfranchisor" means a person to whom the right to | 7 |
| sell or negotiate the sale of subfranchises
is granted.
| 8 |
| (6) "Order" means a consent, authorization, approval, | 9 |
| prohibition, or
requirement applicable to a specific case | 10 |
| issued by the Attorney General
Administrator.
| 11 |
| (7) "Person" means an individual, a corporation, a | 12 |
| partnership, a joint
venture, an association, a joint stock | 13 |
| company, a trust, or an
unincorporated organization.
| 14 |
| (8) "Rule" means any published regulation or standard of | 15 |
| general
application issued by the Administrator.
| 16 |
| (9) "Sale" or "sell" includes every contract or agreement | 17 |
| of sale of,
contract to sell, or disposition of, a franchise or | 18 |
| interest in a franchise
for value.
| 19 |
| (10) "State" means the State of Illinois.
| 20 |
| (11) "Fraud" and "deceit" are not limited to common law | 21 |
| fraud or deceit.
| 22 |
| (12) "Offer" or "offer to sell" includes every attempt to | 23 |
| offer to
dispose of, or solicitation of an offer to buy, a | 24 |
| franchise, any interest
in a franchise or an option to acquire | 25 |
| a franchise for value.
| 26 |
| (13) "Publish" means publicly to issue or circulate by |
|
|
|
09600SB1285ham001 |
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|
| 1 |
| newspaper, mail,
radio, or television, or otherwise to | 2 |
| disseminate to the public.
| 3 |
| (14) "Franchise fee" means any fee or charge that a | 4 |
| franchisee is
required to pay directly or indirectly for the | 5 |
| right to enter into a
business or sell, resell, or distribute | 6 |
| goods, services or franchises
under an agreement, including, | 7 |
| but not limited to, any such payment for
goods or services, | 8 |
| provided that the Administrator may by rule define what
| 9 |
| constitutes an indirect franchise fee, and provided further | 10 |
| that the
following shall not be considered the payment of a | 11 |
| franchise fee: (a) the
payment of a reasonable service charge | 12 |
| to the issuer of a credit card by an
establishment accepting or | 13 |
| honoring such credit card; (b) amounts paid to a
trading stamp | 14 |
| company by a person issuing trading stamps in connection with
| 15 |
| the retail sale of merchandise or services; (c) the purchase or | 16 |
| agreement
to purchase goods for which there is an established | 17 |
| market at a bona fide
wholesale price; (d) the payment for | 18 |
| fixtures necessary to operate the
business; (e) the payment of | 19 |
| rent which reflects payment for the economic
value of the | 20 |
| property; or (f) the purchase or agreement to purchase goods
| 21 |
| for which there is an established market at a bona fide retail | 22 |
| price
subject to a bona fide commission or compensation plan. | 23 |
| The Administrator
may by rule define what shall constitute an | 24 |
| established market.
| 25 |
| (15) "Disclosure statement" means the document provided | 26 |
| for in Section
16 of this Act and all amendments to such |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| document.
| 2 |
| (16) "Write" or "written" shall include printed, | 3 |
| lithographed or any other
means of graphic communication.
| 4 |
| (17) (Blank).
| 5 |
| (18) "Marketing plan or system" means a plan or system | 6 |
| relating to some
aspect of the conduct of a party to a contract | 7 |
| in conducting business,
including but not limited to (a) | 8 |
| specification of price, or special pricing
systems or discount | 9 |
| plans, (b) use of particular sales or display equipment
or | 10 |
| merchandising devices, (c) use of specific sales techniques, | 11 |
| (d) use of
advertising or promotional materials or cooperation | 12 |
| in advertising efforts;
provided that an agreement is not a | 13 |
| marketing plan or system solely because
a manufacturer or | 14 |
| distributor of goods reserves the right to occasionally
require | 15 |
| sale at a special reduced price which is advertised on the
| 16 |
| container or packaging material in which the product is | 17 |
| regularly sold, if
the reduced price is absorbed by the | 18 |
| manufacturer or distributor.
| 19 |
| (19) "Administrator" means the Illinois Attorney General.
| 20 |
| (20) (a) An offer to sell a franchise is made in this State | 21 |
| when the
offer either originates from this State or is | 22 |
| directed by the offeror to
this State and received at the | 23 |
| place to which it is directed. An offer to
sell is accepted | 24 |
| in this State when acceptance is communicated to the
| 25 |
| offeror in this State; and acceptance is communicated to | 26 |
| the offeror in
this State when the offeree directs it to |
|
|
|
09600SB1285ham001 |
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|
| 1 |
| the offeror in this State
reasonably believing the offeror | 2 |
| to be in this State and it is received at
the place to | 3 |
| which it is directed.
| 4 |
| (b) An offer to sell a franchise is not made in this | 5 |
| State merely
because the franchisor circulates or there is | 6 |
| circulated in this State an
advertisement in (i) a bona | 7 |
| fide newspaper or other publication of general,
regular and | 8 |
| paid circulation which has had more than 2/3 of its | 9 |
| circulation
outside this State during the past 12 months, | 10 |
| or (ii) a radio or television
program originating outside | 11 |
| this State which is received in this State.
| 12 |
| (21) "Franchise broker" means any person engaged in the | 13 |
| business of
representing a franchisor in offering for sale or | 14 |
| selling a franchise and
is not a franchisor , an affiliate of a | 15 |
| franchisor or an officer, director or employee of a franchisor | 16 |
| or an affiliate of a franchisor
with respect to such franchise. | 17 |
| A franchisee shall not be a franchise
broker merely because it | 18 |
| receives a payment from the franchisor in
consideration of the | 19 |
| referral of a prospective franchisee to the
franchisor, if the | 20 |
| franchisee does not otherwise participate in the sale of
a | 21 |
| franchise to the prospective franchisee. A franchisee shall not | 22 |
| be deemed
to participate in a sale merely because he responds | 23 |
| to an inquiry from a
prospective franchisee.
| 24 |
| (22) "Salesperson" means any person employed by or | 25 |
| representing a
franchise broker , a franchisor or an affiliate | 26 |
| of the franchisor in effecting or attempting to effect the |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| offer or sale
of a franchise.
| 2 |
| (Source: P.A. 90-642, eff. 7-24-98.)
| 3 |
| (815 ILCS 705/7) (from Ch. 121 1/2, par. 1707)
| 4 |
| Sec. 7.
Sale by franchisee and extension or renewal of | 5 |
| existing
franchise. There shall be exempted from the provisions | 6 |
| of Sections 5, 10,
11, 13 and 15 of this Act the offer or sale | 7 |
| of a franchise by a franchisee
for its own account if the sale | 8 |
| is not effected by or through a franchisor.
A sale is not | 9 |
| effected by or through a franchisor merely because a
franchisor | 10 |
| has a right to approve or disapprove a different franchisee or
| 11 |
| requires payment of a reasonable transfer fee or requires the | 12 |
| new franchisee to execute a franchise agreement on terms not | 13 |
| materially different from the existing franchise agreement .
| 14 |
| There shall be exempted from the provisions of Sections 5, | 15 |
| 10, 11, 13 and
15 of this Act the extension or renewal of an | 16 |
| existing franchise or the
exchange or substitution of a | 17 |
| modified or amended franchise agreement where
there is no | 18 |
| interruption in the operation of the franchise business by the
| 19 |
| franchisee.
| 20 |
| (Source: P.A. 85-551.)
| 21 |
| (815 ILCS 705/8) (from Ch. 121 1/2, par. 1708)
| 22 |
| Sec. 8. Exemptions. | 23 |
| (a) There shall be exempted, from the registration | 24 |
| requirements of Section 10 of this Act, the offer and sale of a |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| franchise if: | 2 |
| (1) the franchisor has a net worth on a consolidated | 3 |
| basis, according to its most recent audited financial | 4 |
| statement, of not less than $15,000,000; or the franchisor | 5 |
| has a net worth, according to its most recent unaudited | 6 |
| financial statement, of not less than $1,000,000 and is at | 7 |
| least 80% owned by a corporation which has a net worth on a | 8 |
| consolidated basis, according to its most recent audited | 9 |
| financial statement, of not less than $15,000,000; | 10 |
| (2) the franchisee (or its parent or any affiliates) is | 11 |
| an entity that has been in business for at least 5 years | 12 |
| and has a net worth of at least $5,000,000; or | 13 |
| (3) one or more purchasers of at least 50% ownership | 14 |
| interest in the franchise within 60 days of the sale, has | 15 |
| been, for at least 2 years, an officer, director, general | 16 |
| partner, individual with management responsibility for the | 17 |
| offer and sale of the franchisor's franchises or the | 18 |
| administrator of the franchised network; or within 60 days | 19 |
| of the sale, has been, for at least 2 years, an owner of at | 20 |
| least a 25% interest in the franchisor. | 21 |
| Provided, unless exempted by order or rule of the | 22 |
| Administrator, the franchisor shall deliver to the prospective | 23 |
| franchisee a disclosure statement in accordance with the | 24 |
| requirements of Section 5(2) of this Act in connection with any | 25 |
| transaction exempted under this Section 8(a). | 26 |
| (b) There shall be exempted from the provisions of
Sections |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| 5, 10, 11, 13 and 15 of this Act the offer and sale of a | 2 |
| franchise
if the prospective franchisee qualifies as one of the | 3 |
| following:
| 4 |
| any bank as defined in Section 3(a)(2) of the Securities | 5 |
| Act of
1933 whether acting in its individual or fiduciary | 6 |
| capacity or as an
insurance company as defined in Section 2(13) | 7 |
| of that Act.
| 8 |
| (Source: P.A. 85-551 .)
| 9 |
| (815 ILCS 705/10) (from Ch. 121 1/2, par. 1710)
| 10 |
| Sec. 10. Registration and Annual Report. No franchisor may | 11 |
| sell or
offer to sell a franchise in this State if (1) the | 12 |
| franchisee is domiciled
in this State or (2) the offer of the | 13 |
| franchise is made or accepted in this
State and the franchise | 14 |
| business is or will be located in this State, unless
the | 15 |
| franchisor has registered the franchise with the Administrator | 16 |
| by
filing such form of notification and disclosure statement
as | 17 |
| required under Section 16.
| 18 |
| The registration of a franchise shall become effective on | 19 |
| the 21st day after the date of the filing of the required | 20 |
| materials,
unless
the Administrator has
denied registration | 21 |
| under subdivision (a)(3) of Section 22.
| 22 |
| The registration of a franchise shall expire 120 days after | 23 |
| the franchisor's fiscal year end. Annually, but not later than | 24 |
| one business day before the
anniversary date of the
| 25 |
| registration expires , the franchisor shall file the disclosure |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| statement updated as of
the date of the franchisor's prior | 2 |
| fiscal year end a date within 120
days of the anniversary date | 3 |
| of the registration .
| 4 |
| (Source: P.A. 90-642, eff. 7-24-98.)
| 5 |
| (815 ILCS 705/11) (from Ch. 121 1/2, par. 1711)
| 6 |
| Sec. 11. Amendments. Within 30 days after the close of each | 7 |
| quarter of its fiscal year, the franchisor shall prepare | 8 |
| revisions to its disclosure statement to reflect any material | 9 |
| changes to disclosures included, or required to be included, in | 10 |
| the 90 days of the occurrence of any
material change in
any | 11 |
| facts required to be disclosed, a franchisor whose franchise is
| 12 |
| registered under this Act shall amend its disclosure statement . | 13 |
| The franchisor and shall
deliver the amended disclosure | 14 |
| statement in accordance with the
requirements of subsection (2) | 15 |
| of Section 5 and Section 16 of this Act to
any prospective | 16 |
| franchisee, including prospective franchisees to whom a
| 17 |
| disclosure statement was previously delivered if the material | 18 |
| change
relates to or affects the franchisor or the franchise | 19 |
| offered to such
prospective franchisees. The amended | 20 |
| disclosure statement shall be
filed with the Administrator. An | 21 |
| amendment shall not be required if the terms of
the franchise | 22 |
| agreement merely reflect changes from the franchisor's
| 23 |
| registered franchise made pursuant to negotiations between the | 24 |
| franchisee
and the franchisor.
| 25 |
| The fact that the franchise is considered to be registered |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| is not a
finding that the amended disclosure statement complies | 2 |
| with the standard of
disclosure required by this Act.
| 3 |
| (Source: P.A. 90-642, eff. 7-24-98.)
| 4 |
| (815 ILCS 705/15) (from Ch. 121 1/2, par. 1715)
| 5 |
| Sec. 15. Escrow of franchise fees; surety bonds ; franchise | 6 |
| fee deferrals . If the Administrator
finds that a franchisor has | 7 |
| failed to demonstrate that adequate financial
arrangements | 8 |
| have been made to fulfill obligations to provide real estate,
| 9 |
| improvements, equipment, inventory, training, or other items | 10 |
| to be included
in the establishment and opening of the | 11 |
| franchise business being offered,
the Administrator may by rule | 12 |
| or order require the escrow or impoundment of
franchise fees | 13 |
| and other funds paid by the franchisee until such obligations
| 14 |
| have been fulfilled, or, at the option of the franchisor, the | 15 |
| furnishing
of a surety bond as provided by rule of the | 16 |
| Administrator, if he finds that
such requirement is necessary | 17 |
| and appropriate to protect prospective
franchisees , or, at the | 18 |
| option of the franchisor, the deferral of payment of the | 19 |
| initial fee until the opening of the franchise business .
| 20 |
| (Source: P.A. 85-551.)
| 21 |
| (815 ILCS 705/16) (from Ch. 121 1/2, par. 1716)
| 22 |
| Sec. 16. Form and contents of disclosure statements. The | 23 |
| disclosure statement required under this Act shall be prepared | 24 |
| in
accordance
with the Federal Trade Commission rule entitled |
|
|
|
09600SB1285ham001 |
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|
| 1 |
| Disclosure Requirements and Prohibitions Concerning | 2 |
| Franchising, 16 C.F.R. Part 436, as it may be Uniform Franchise | 3 |
| Offering Circular Guidelines as adopted and amended , the | 4 |
| Guidelines promulgated
by the North American Securities | 5 |
| Administrators Association, Inc., as they may be amended, and | 6 |
| the rules adopted by the Administrator pursuant to Section 32 | 7 |
| of this Act. Incorporated.
| 8 |
| All statements in the disclosure statement shall be free | 9 |
| from any false
or misleading statement of a material fact, | 10 |
| shall not omit to state any
material fact required to be stated | 11 |
| or necessary to make the statements
not misleading, and shall | 12 |
| be accurate and complete as of the effective
date thereof.
| 13 |
| (Source: P.A. 90-642, eff. 7-24-98.)
| 14 |
| (815 ILCS 705/21) (from Ch. 121 1/2, par. 1721)
| 15 |
| Sec. 21. Franchise Advisory Board. There is created in the | 16 |
| Office of
the Administrator a Franchise Advisory Board. The | 17 |
| Franchise Advisory Board
shall consist of such members as the | 18 |
| Administrator deems appropriate to
advise him on franchising | 19 |
| and franchise related matters. The members shall
be persons who | 20 |
| have knowledge and experience in franchising. The members
of | 21 |
| the Franchise Advisory Board shall serve at the pleasure of the
| 22 |
| Administrator. The Franchise Advisory Board from time to time | 23 |
| shall make
recommendations concerning the administration and | 24 |
| enforcement of this Act.
Members of the Franchise Advisory | 25 |
| Board shall serve without compensation
but shall be reimbursed |
|
|
|
09600SB1285ham001 |
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LRB096 03127 KTG 25717 a |
|
| 1 |
| for actual and necessary expenses incurred in their
official | 2 |
| capacities . The Board shall select its own chairman, establish
| 3 |
| rules and procedures, and keep a record of matters transpiring | 4 |
| at all meetings.
| 5 |
| (Source: P.A. 85-551.)
| 6 |
| (815 ILCS 705/22) (from Ch. 121 1/2, par. 1722)
| 7 |
| Sec. 22. Enforcement.
| 8 |
| (a) The Administrator may suspend, terminate,
prohibit or | 9 |
| deny the sale of any franchise or registration of any | 10 |
| franchise ,
or franchise broker or salesperson if it appears to | 11 |
| him that: (1) there has
been a failure to comply with any of | 12 |
| the provisions of this Act or the rules
or orders of the | 13 |
| Administrator pertaining thereto; or (2) that the disclosure
| 14 |
| statement or any amendment thereto
includes any false or | 15 |
| misleading statement of a material fact or omits to
state
any | 16 |
| material fact required to be stated therein or necessary to | 17 |
| make the
statements therein not misleading; or (3)
that the | 18 |
| disclosure statement
filed in conjunction with an initial | 19 |
| registration under
Section 10 is materially deficient. A | 20 |
| disclosure statement is "materially
deficient" if it fails to | 21 |
| comply with the requirements of the Uniform Franchise
Offering | 22 |
| Circular Guidelines referred to in Section 16;
or (4) that the | 23 |
| sale of the
franchise would constitute
a misrepresentation, | 24 |
| deceit or fraud upon prospective franchisees; or (5)
that any | 25 |
| person in this State is engaging in or about to engage in |
|
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| false,
fraudulent or deceptive practices or any device, scheme, | 2 |
| or artifice to defraud
in connection with the offer or sale of | 3 |
| the franchise; or (6) that any person
identified in the | 4 |
| disclosure statement or any person engaged in the offer
or sale | 5 |
| of the franchise in this State has been convicted of an | 6 |
| offense,
is subject to an order or civil judgment or is a | 7 |
| defendant in a proceeding
required to be described in the | 8 |
| disclosure statement and the involvement
of such person creates | 9 |
| an unreasonable risk to prospective franchisees;
or (7) | 10 |
| (blank); or (8) (blank); or (9) that the franchisor's | 11 |
| enterprise
or method of business includes or would include | 12 |
| activities which are illegal
where performed; or (10) (blank);
| 13 |
| or (11) (blank).
| 14 |
| In no case shall the Administrator, or any person | 15 |
| designated by him, in
the administration of this Act, incur any | 16 |
| official or personal liability by
issuing an order or other | 17 |
| proceeding or by suspending, denying, prohibiting
or | 18 |
| terminating the registration of a franchise broker or | 19 |
| salesperson, or by
denying, suspending, terminating or | 20 |
| prohibiting the registration of
franchises, or prohibiting the | 21 |
| sale of franchises, or by suspending or
prohibiting any person | 22 |
| from acting as a franchise broker or salesperson.
| 23 |
| The Administrator may exercise any of the powers specified | 24 |
| in Section 31 of
this Act.
| 25 |
| (b) The Administrator, with such assistance as he may from
| 26 |
| time to time request of the state's attorneys in the several |
|
|
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| counties, may
institute proceedings in the circuit court to | 2 |
| prevent and restrain
violations of this Act or of any rule or | 3 |
| order prescribed or issued under
this Act. In such a | 4 |
| proceeding, the court shall determine whether a
violation has | 5 |
| been committed, and shall enter such judgment or decree as it
| 6 |
| considers necessary to remove the effects of any violation and | 7 |
| to prevent
such violation from continuing or from being renewed | 8 |
| in the future. The
court, in its discretion, may exercise all | 9 |
| powers necessary for this
purpose, including, but not limited | 10 |
| to, injunction, revocation, forfeiture
or suspension of the | 11 |
| charter, franchise, certificate of authority or
privileges of | 12 |
| any corporation, association, limited partnership or other
| 13 |
| business organization operating under the laws of this State, | 14 |
| dissolution
of domestic corporations or associations, | 15 |
| suspension or termination of the
right of foreign corporations | 16 |
| or associations to do business in this State,
or restitution or | 17 |
| payment of damages by a franchisor to persons injured by
| 18 |
| violations of this Act, including without limitation an award | 19 |
| of reasonable
attorneys fees and costs.
| 20 |
| (Source: P.A. 90-642, eff. 7-24-98.)
| 21 |
| (815 ILCS 705/26) (from Ch. 121 1/2, par. 1726)
| 22 |
| Sec. 26. Private civil actions. Any person who offers,
| 23 |
| sells, terminates, or fails to renew a franchise in violation | 24 |
| of this
Act shall be liable to the franchisee who may sue for | 25 |
| damages caused
thereby. This amendatory Act of 1992 is intended |
|
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| to clarify the
existence of a private right of action under | 2 |
| existing law with respect to
the termination or nonrenewal of a | 3 |
| franchise in violation of this Act.
In the case of a violation | 4 |
| of Section 5, 6, 10, 11, or 15 of the Act,
the franchisee may | 5 |
| also sue for rescission.
| 6 |
| No franchisee may sue for rescission under this Section 26 | 7 |
| who
shall fail, within 30 days from the date of receipt | 8 |
| thereof, to accept an
offer to return the consideration paid or | 9 |
| to repurchase the franchise
purchased by such person. Every | 10 |
| offer provided for in this Section shall
be in writing, shall | 11 |
| be delivered to the franchisee or sent by certified
mail | 12 |
| addressed to the franchisee at such person's last known | 13 |
| address, shall
offer to return any consideration paid or to | 14 |
| repurchase the franchise for a
price equal to the full amount | 15 |
| paid less any net income received by the
franchisee, plus the | 16 |
| legal rate of interest thereon, and may require the
franchisee | 17 |
| to return to the person making such offer all unsold goods,
| 18 |
| equipment, fixtures, leases and similar items received from | 19 |
| such person.
Such offer shall continue in force for 30 days | 20 |
| from the date on which it
was received by the franchisee and | 21 |
| shall advise the franchisee of such
rights and the period of | 22 |
| time limited for acceptance thereof. Any
agreement not to | 23 |
| accept or refusing or waiving any such offer made during
or | 24 |
| prior to the expiration of said 30 days shall be void.
| 25 |
| The term "franchisee" as used in this Section shall include | 26 |
| the personal
representative or representatives of the |
|
|
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| franchisee.
| 2 |
| Every person who directly or indirectly controls a person | 3 |
| liable under
this Section 26, every partner in a firm so | 4 |
| liable, every principal
executive officer or director of a | 5 |
| corporation so liable, every manager of a limited liability | 6 |
| company so liable, every person
occupying a similar status or | 7 |
| performing similar functions, and every
employee of a person so | 8 |
| liable, who materially aids in the act or
transaction | 9 |
| constituting the violation, is also liable jointly and | 10 |
| severally
with and to the same extent as such person, unless | 11 |
| said person who otherwise
is liable had no knowledge or | 12 |
| reasonable basis to have knowledge of the
facts, acts or | 13 |
| transactions constituting the alleged violation.
| 14 |
| Every franchisee in whose favor judgment is entered in an | 15 |
| action
brought under this Section shall be entitled to the | 16 |
| costs of the action
including, without limitation, reasonable | 17 |
| attorney's fees.
| 18 |
| (Source: P.A. 87-1143.)
| 19 |
| (815 ILCS 705/29) (from Ch. 121 1/2, par. 1729)
| 20 |
| Sec. 29.
Certificate of registration or filing of annual | 21 |
| report;
admissibility in evidence. In any civil or criminal | 22 |
| action brought under
this Act, a Certificate under the seal of | 23 |
| this State, signed by the
Administrator, stating whether or not | 24 |
| a franchise is registered, or whether
or not an annual report | 25 |
| of a franchisor has been filed under Section 10 of
this Act, or |
|
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| whether or not a person has registered as a franchise broker
| 2 |
| under Section 13 of this Act, shall constitute prima facie | 3 |
| evidence of such
matter, and shall be admissible into evidence | 4 |
| at trial without proof of
foundation or additional | 5 |
| authenticity.
| 6 |
| (Source: P.A. 85-551.)
| 7 |
| (815 ILCS 705/31) (from Ch. 121 1/2, par. 1731)
| 8 |
| Sec. 31. Powers of the Administrator. (a) Investigations. | 9 |
| The
Administrator may in his discretion: (1) make such public | 10 |
| or private
investigations inside or outside this State as he | 11 |
| deems necessary (i) to
determine whether any person has | 12 |
| violated, is violating, or is about to
violate any provision of | 13 |
| this Act or any rule or order prescribed or issued
under this | 14 |
| Act or (ii) to aid in the enforcement of this Act or in the
| 15 |
| prescribing of rules under this Act; and (2) publish | 16 |
| information concerning
the violation of this Act or any rule or | 17 |
| order prescribed or issued under
this Act. No actions taken or | 18 |
| orders issued by the Administrator shall be
binding on, nor in | 19 |
| any way preclude the Administrator from conducting any
| 20 |
| investigation or commencing any action authorized under this | 21 |
| Act. The
Administrator or any of his assistants may participate | 22 |
| in any hearings
conducted by the Administrator under this Act | 23 |
| and the Administrator may
provide such assistance as the | 24 |
| Administrator believes necessary to
effectively fulfill the | 25 |
| purposes of this Act.
|
|
|
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| (b) Subpoenas. For the purpose of any investigation or | 2 |
| proceeding under
this Act and prior to the commencement of any | 3 |
| civil or criminal action as
provided for in this Act, the | 4 |
| Administrator has the authority to subpoena
witnesses, compel | 5 |
| their attendance, examine them under oath, or require the
| 6 |
| production of any books, documents, records or tangible things, | 7 |
| hereafter
referred to as "documentary material", which the | 8 |
| Administrator deems
relevant or material to his investigation, | 9 |
| for inspection, reproducing or
copying under such terms and | 10 |
| conditions as are hereafter set forth. Any
subpoena issued by | 11 |
| the Administrator shall contain the following information:
(1) | 12 |
| the statute and section thereof, the alleged violation of which | 13 |
| is
under investigation; (2) the date, place and time at which | 14 |
| the person is
required to appear or produce documentary | 15 |
| material in his possession,
custody or control at a designated | 16 |
| office of the Administrator, which date
shall not be less than | 17 |
| 10 days from date of service of the subpoena; and
(3) where | 18 |
| documentary material is required to be produced, the same shall
| 19 |
| be prescribed by class so as to clearly indicate the material | 20 |
| demanded.
| 21 |
| (c) Production of documentary material. The Administrator | 22 |
| is hereby
authorized, and may so elect to require the | 23 |
| production, pursuant to this
Section of documentary material | 24 |
| prior to the taking of any testimony of
the person subpoenaed, | 25 |
| in which event such documentary material shall be
made | 26 |
| available for inspection and copying during normal business |
|
|
|
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| hours at
the principal place of business of the person served, | 2 |
| or at such other time
and place as may be agreed upon by the | 3 |
| person served and the Administrator.
When documentary material | 4 |
| is demanded by subpoena, said subpoena shall not
(1) contain | 5 |
| any requirement which would be unreasonable or improper if
| 6 |
| contained in a subpoena duces tecum issued by a court of this | 7 |
| State; or (2)
require the disclosure of any documentary | 8 |
| material which would be
privileged, or which for any other | 9 |
| reason would not be required by a
subpoena duces tecum issued | 10 |
| by a court of this State.
| 11 |
| (d) Service of subpoenas. Service of a subpoena of the | 12 |
| Administrator as
provided herein may be made by (1) delivery of | 13 |
| a duly executed copy thereof
to the person served or if a | 14 |
| person is not a natural person, to the
principal place of | 15 |
| business of the person to be served, or (2) mailing by
| 16 |
| certified mail, return receipt requested, a duly executed copy | 17 |
| thereof
addressed to the person to be served at his principal | 18 |
| place of business in
this State, or, if said person has no | 19 |
| place of business in this State, to
his principal office.
| 20 |
| (e) Examination of witnesses. The examination of all | 21 |
| witnesses under
this Section shall be conducted by the | 22 |
| Administrator, or by his deputy
designated by him, before an | 23 |
| officer authorized to administer oaths in this
State. The | 24 |
| testimony shall be taken stenographically or by a sound
| 25 |
| recording device and shall be transcribed.
| 26 |
| (f) Fees. All persons served with a subpoena by the |
|
|
|
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| Administrator under
this Act shall be paid the same fees and | 2 |
| mileage as are paid to witnesses
in the courts of this State.
| 3 |
| (g) Judicial enforcement of subpoenas. In the event a | 4 |
| witness served
with a subpoena by the Administrator under this | 5 |
| Act fails or refuses to
obey same or to produce documentary | 6 |
| material as provided herein or to give
testimony relevant or | 7 |
| material to the investigation being conducted, the
| 8 |
| Administrator may petition any circuit court for an order | 9 |
| requiring said
witness to attend and testify or produce the | 10 |
| documentary material demanded.
Thereafter, any failure or | 11 |
| refusal on the part of the witness to obey such
order of court | 12 |
| may be punishable by the court as a contempt thereof.
| 13 |
| (h) Immunity from prosecution. No person is excused from | 14 |
| attending and
testifying or from producing any document or | 15 |
| records before the
Administrator in obedience to the subpoena | 16 |
| of the Administrator, in any
proceeding instituted by the | 17 |
| Administrator and authorized by this Act, on
the ground that | 18 |
| the testimony or evidence, documentary or otherwise,
required | 19 |
| of him may tend to incriminate him or subject him to a penalty | 20 |
| or
forfeiture. No individual may be prosecuted or subjected to | 21 |
| any penalty or
forfeiture for or on account of any transaction, | 22 |
| matter, or thing
concerning which he is compelled, after | 23 |
| validly claiming his privilege
against self-incrimination, to | 24 |
| testify or produce evidence, documentary or
otherwise, except | 25 |
| that the individual testifying is not exempt from
prosecution | 26 |
| and punishment for perjury or contempt committed in testifying.
|
|
|
|
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|
| 1 |
| (i) Administrator entitled to recover costs. In any action | 2 |
| brought under
the provisions of this Act, the Administrator is | 3 |
| entitled to recover costs
for the use of this State.
| 4 |
| (j) In the administration of this Act, the Attorney General | 5 |
| may accept an Assurance of Voluntary Compliance with respect to | 6 |
| any method, act, or practice deemed to be violative of the Act | 7 |
| from any person who has engaged in, is engaging in, or was | 8 |
| about to engage in such method, act, or practice. Evidence of a | 9 |
| violation of an Assurance of Voluntary Compliance shall be | 10 |
| prima facie evidence of a violation of this Act in any | 11 |
| subsequent proceeding brought by the Attorney General against | 12 |
| the alleged violator. The Administrator may require that an | 13 |
| Assurance of Voluntary Compliance be disclosed in the | 14 |
| disclosure statement. | 15 |
| (Source: P.A. 85-551.)
| 16 |
| (815 ILCS 705/40) (from Ch. 121 1/2, par. 1740)
| 17 |
| Sec. 40. Fees. | 18 |
| (a) The Administrator shall charge and collect the fees
| 19 |
| fixed by this Section , or as prescribed by rule of the | 20 |
| Administrator . All fees and charges collected under this | 21 |
| Section
shall be transmitted to the State Treasurer at least | 22 |
| weekly, accompanied by
a detailed statement thereof. Such fees | 23 |
| and charges shall be refundable at
the discretion of the | 24 |
| Administrator.
| 25 |
| (b) The fee for the initial registration of a franchise |
|
|
|
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|
| 1 |
| shall be $500.
| 2 |
| (c) The fee for filing an amended disclosure statement | 3 |
| shall be $100 if
the amendment pertains to a material change, | 4 |
| otherwise $25.
| 5 |
| (d) The fee for an interpretive opinion shall be $50.
| 6 |
| (e) The fee for filing an initial large franchisor | 7 |
| exemption under Section 200.202 of Title 14 of the Illinois | 8 |
| Administrative Code shall be $500 and the fee for renewals of | 9 |
| this exemption shall be $100 registration of a franchise broker | 10 |
| shall be $100 with a
renewal fee of $100 .
| 11 |
| (f) The fee for filing an annual report shall be $100.
| 12 |
| (Source: P.A. 85-551.)
| 13 |
| (815 ILCS 705/13 rep.) | 14 |
| Section 25. The Franchise Disclosure Act of 1987 is | 15 |
| amended by repealing Section 13. | 16 |
| Section 99. Effective date. This Act takes effect October | 17 |
| 1, 2009.".
|
|