Mich. Admin. Code R. 445.704 - Denial, suspension, or revocation of registration

Rule 704. 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.

Notes

Mich. Admin. Code R. 445.704

1979 AC