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3121
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MARVIN MANDEL, Governor
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NUMEROUS PROBLEMS BOTH FROM AN INVESTMENT AND A BUSINESS
POINT OF VIEW IN THIS STATE. FRANCHISEES AND
DISTRIBUTEES HAVE SUFFERED SUBSTANTIAL LOSSES WHEN THE
FRANCHISOR, DISTRIBUTOR OR HIS REPRESENTATIVE HAS NOT
PROVIDED FULL AND COMPLETE INFORMATION REGARDING THE
FRANCHISOR-FRANCHISEE RELATIONSHIP, THE DETAILS OF THE
CONTRACT BETWEEN FRANCHISOR AND FRANCHISEE OR DISTRIBUTOR
AND DISTRIBUTEE, AND THE PRIOR BUSINESS EXPERIENCE OF THE
FRANCHISOR, DISTRIBUTOR, OR HIS REPRESENTATIVE.
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(B) IT IS THE INTENT OF THIS SUBTITLE TO PROVIDE
EACH PROSPECTIVE FRANCHISEE OR DISTRIBUTEE THE
INFORMATION NECESSARY REGARDING FRANCHISES OR
DISTRIBUTORSHIPS BEING OFFERED. FURTHER, IT IS THE
INTENT OF THIS SUBTITLE TO PROHIBIT THE SALE OF
FRANCHISES IF THE SALE WOULD LEAD TO FRAUD OR A
LIKELIHOOD THAT THE FRANCHISOR'S OR DISTRIBUTOR'S
REPRESENTATIONS WOULD NOT BE FULFILLED, AND TO PROTECT
THE FRANCHISOR OR DISTRIBUTOR AND FRANCHISEE OR
DISTRIBUTEE WITH REGARD TO THEIR BUSINESS RELATIONSHIP.
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325.
BEGINNING JULY 1, 1977, IT IS UNLAWFUL FOR ANY
PERSON TO OFFER, THROUGH ADVERTISEMENT OR OTHERWISE, OR
SELL ANY FRANCHISE IN THIS STATE UNLESS THE OFFER OF THE
FRANCHISE HAS BEEN REGISTERED UNDER THIS SUBTITLE.
326.
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THE REGISTRATION REQUIREMENTS OF §325 DO NOT APPLY
TO THE FOLLOWING CIRCUMSTANCES:
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(1) THE OFFER OR SALE OF A FRANCHISE BY A
FRANCHISEE FOR HIS OWN ACCOUNT OR THE OFFER OR SALE OF
THE ENTIRE AREA FRANCHISE OWNED BY A SUBFRANCHISOR FOR
HIS OWN ACCOUNT. A SALE IS NOT EFFECTED BY OR THROUGH A
FRANCHISOR MERELY BECAUSE A FRANCHISOR HAS A RIGHT TO
APPROVE OR DISAPPROVE A DIFFERENT FRANCHISEE;
(2) ANY TRANSACTION BY AN EXECUTOR,
ADMINISTRATOR, SHERIFF, RECEIVER, TRUSTEE IN BANKRUPTCY,
GUARDIAN OR CONSERVATOR;
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(3) ANY OFFER OR SALE OF A FRANCHISE WHICH
IS SUBSTANTIALLY SIMILAR TO A FRANCHISE OWNED BY THE
OFFEREE;
(3) (4) ANY OTHER TRANSACTIONS WHICH THE
COMMISSIONER BY RULE EXEMPTS AS NOT BEING COMPREHENDED
WITHIN THE PURPOSES OF THIS ACT AND THE REGISTRATION OF
WHICH HE FINDS IS NOT NECESSARY OR APPROPRIATE IN THE
PUBLIC INTEREST OR FOR THE PROTECTION OF INVESTORS.
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327.
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THE APPLICATION FOR REGISTRATION OF AN OFFER
CONSISTS OF AN OFFERING PROSPECTUS WHICH SHALL BE FILED
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