Mich. Admin. Code R. 445.708 - Surety bond

Rule 708.

(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.

Notes

Mich. Admin. Code R. 445.708

1979 AC