Haw. Code R. § 16-37-5 - Impoundments
(a) The director may order the impoundment of
franchise fees if the director finds that such requirement is appropriate to
protect the prospective franchisee.
(b) Operation of impoundment. When an
impoundment is imposed in connection with the filing of an offering circular,
one hundred per cent of franchisee fees and all other funds paid by the
franchisees or subfranchisors for any purpose shall within forty-eight hours of
the receipt of such funds, be placed with the depository until the director
takes further action pursuant to subsection (e) of this section. All checks
shall be made payable to the depository.
(c) Purchase receipts. When an impoundment is
imposed, the franchisor shall deliver to each franchisee or subfranchisor, a
purchase receipt, in a form approved by the director. Such purchase receipts
shall be consecutively numbered and prepared in triplicate and the original
given to the franchisee or subfranchisor, the first copy to the depository
together with the payment received and the second copy to the
franchisor.
(d) Depository. Funds
subject to an impoundment shall be placed in a separate trust account with a
bank or a fiduciary company authorized to do business in this State and
acceptable to the director. A written consent of the depository to act in such
capacity shall be filed with the director.
(e) Release of impoundments. The director
shall authorize the depository to release to the franchisor such amounts of the
impounded funds applicable to a specified franchisee (or subfranchisor) upon a
showing that the franchisor has fulfilled its obligations under the franchise
agreement, or that for other reasons the impoundment is no longer required for
protection of franchisees.
An application for an order of the director authorizing the release of impoundments to the franchisor shall be verified and shall contain the following:
(1) A statement of the
franchisor that all required proceeds from the sale of franchises have been
placed with the depository in accordance with the terms and conditions of the
impoundment.
(2) A statement of the
depository signed by an appropriate officer setting forth the aggregate amount
of impounded funds placed with the depository.
(3) The names of each franchisee (or
subfranchisor) and the amount held in the impoundment for the account of each
franchisee (or subfranchisor).
(4)
A statement by the franchisee that the franchisor has performed its obligations
under the franchise contract.
(5)
Such other information as the director may require in a particular
case.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.