Section 445.405. Sales and offers by existing franchisees.

(1) A franchisee seeking to offer or sell a franchise for his own account, whose franchisor is currently registered or  exempted  under section 6(2)(a) or (b)  of the  act,  shall  comply  with   the  following disclosure requirements by providing:

(a)  The offeree with a copy of the franchisor's current prospectus.

(b)  Full access to the books and records of the franchise in the actual or constructive possession of the franchisee.

(c)    Full disclosure relating to the risks of the franchise of which the selling franchisee knows and which are not readily apparent to an offeree considering the purchase of that franchise.

(d)  Additional material information relating to the franchisor known to the present franchisee.

(2)   A franchisee seeking to offer or sell a  franchise   for  his  own account, whose franchisor is not currently registered under the act but was so registered or exempted under section 6(2)(a) or (b) of the act in the past, shall comply with the following   disclosure   requirements   by providing:

(a)   The offeree with the most recent prospectus of the franchisor used in this state or elsewhere.

(b)  The offeree with access to the material reports and correspondence in the actual or constructive possession of the franchisee, from the franchisor, relating to the economic or legal relationship  between  the franchisee and the franchisor, from the date of the last prospectus to the present.

(c)  Additional material information relating to the franchisor known to the present franchisee.

(d)  Full access to the books and records of the franchise in the actual or constructive possession of the franchisee.

(e)    Full disclosure relating to the risks of the franchise of which the selling franchisee knows and which are not readily apparent to an offeree considering purchase of that franchise.

(3)   A franchisee seeking to offer or sell a  franchise   for  his  own account, whose franchisor is not now and has not been registered or exempted under section (6)(2)(a) or (b) of the act, shall comply with the following disclosure requirements by providing:

(a)  Full access to the books and records of the franchise in the actual or constructive possession of the franchisee.

(b)    Full disclosure relating to the risks of the franchise of which the selling franchisee knows and which are  readily  apparent  to  an   offeree considering purchase of that franchise.

(c)  Additional material information relating to the franchisor known to the present franchisee.

(4)   The franchisee shall, if requested by  the   franchisor,  furnish   an affidavit that he has complied with the above disclosure requirements.

(5)   The exemptions provided by this section shall not be available to a franchisee who wishes to divide or subdivide his territory, exclusive or otherwise, and sell more than 1 portion or division, except  upon  written authorization of the administrator.

History: 1979 AC.