Section 445.704. Denial, suspension, or revocation of registration.

The administrator may, by order, deny, suspend, or revoke a registration of a franchise agent if the administrator finds  that  the order is in the public interest and the applicant or registrant or a person directly or indirectly controlling the applicant or registrant:

(a)   Has filed an application for registration which, as of its effective date or as of any date after filing  in   the  case  of  an  order   denying effectiveness, was  incomplete in a material respect or contained a statement which was, in light of the circumstances under which  it   was made, false or misleading with respect to a material fact.

(b)   Has violated or failed to comply with the act, or a rule  or   an  order under the

act.

(c)   ) Has been convicted of a misdemeanor involving moral turpitude, or of  a felony.

(d)  Is the subject of a final administrative order of a state or federal agency relating

to, or is permanently or temporarily enjoined by a court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of, the securities, franchise, real  estate, or insurance business.

(e)   Is the subject of an order of the administrator denying, suspending, or revoking registration as a broker-dealer, agent, investment advisor,  or franchise agent under part  6  or 7  of these rules   or  other  similar registration.

(f)   Is the subject of an order entered by the  securities  or   franchise administrator of another state,  or  by  the  securities  and   exchange commission, denying or revoking registration as a broker-dealer, agent, or investment advisor, or the substantial equivalent of these terms, or is the subject of an order  of  the   securities  and exchange commission suspending or expelling that person from a national securities exchange or national securities association registered under  the  securities  exchange act of 1934, or is the subject of a United States post office fraud order.

(g)   Has engaged in dishonest or unethical business practices, including, but not limited to, the following practices:

(i)   Recommending to a franchisee the purchase, sale, or exchange of a franchise without reasonable grounds to believe that the recommendation is suitable for the person.

(ii)     Acting as agent for both buyer and seller without fully disclosing the relationship to both parties.

(iii)   Charging the franchisee   or  franchisor   more  than  a    reasonable commission in connection with the sale.

(iv)     Personally borrowing money from  a     present      or    prospective franchisee.

(v)   Effecting transactions not reported to the franchisor.

(vi)         Operating an account under a name  not  registered  with  the administrator.

(vii)    Representing to a franchisee that, as a condition of realizing significant earnings from the franchise, the franchisee may have to recruit others who may likewise invest in a franchise or distributorship, or require that the franchisee shall so recruit.

(h)   Is insolvent, either because liabilities exceed assets or because obligations cannot be met as they mature.

(i)   Is not qualified on the basis of factors such as training, experience, or knowledge of the franchise business.

(j)   Has failed to supervise franchise  agents   in  its   employment  as defined in part 6 to insure that sales are made only to persons for whom the franchise is a suitable investment.

(k)   Has failed to pay the proper filing fee. The administrator may enter only a denial order under this subdivision, and it shall vacate the order when the deficiency has been corrected.

History: 1979 AC.