Section 445.708. Surety bond.

(1) A franchise agent whose net worth, derived by the use of generally accepted accounting principles, does not exceed $100,000.00 shall file with the administrator a surety bond in the amount of $25,000.00 on a form provided by the administrator, and shall maintain  the bond in that amount at all times while registered as a franchise agent.

(2)     If   a  franchise   agent  fails  to  maintain     the    minimum       net      worth       of

$100,000.00,  or  fails   to  file  or  to  maintain   its  bond,    the     franchise     agent  shall immediately cease business and  notify the   administrator   of  this failure.

(3)   If a suit is brought to enforce liability on the bond, the franchise agent shall promptly  notify  the  administrator   thereof.  If  the   bond principal amount is reduced by any recovery against it, the  bond  shall   be immediately restored to $25,000.00.

(4)   Prior to the disbursement of funds, a court shall require a claimant to publicize the claim against the franchise agent's bond in a  manner reasonably calculated to inform other franchisees of the pendency of the action and to permit intervention and filing of claims.

(5)   The bond shall also be for the use and benefit of persons who may have a cause of action in this state by reason of embezzlement, defalcation, or misappropriation of securities or funds  by the   principal, its agents, and employees.

(6)   The administrator may exempt a registered franchise agent from this bond requirement, or may vary its terms, only if justified and appropriate under special circumstances.

History: 1979 AC.