Mich. Admin. Code R. 445.801 - Contents of advertisement

Rule 801.

(1) Pursuant to section 24 of the act, advertising, as defined in section 2(1) of the act, to be used to offer a franchise shall be filed in the office of the administrator in duplicate not less than 10 business days prior to the publication.

(2) An advertisement shall not contain a statement or inference that a purchase of a franchise is a safe investment or that failure, loss, or default is impossible or unlikely, or that earnings or profits are assured.

(3) An advertisement, other than the offering prospectus used pursuant to section 6(1) or 6(2)(a) or (b) of the act, shall not contain a projection of future franchisee earnings, unless the projection is:

(a) Based on a past earning record, over a reasonable period of time, of all franchisees operating under conditions, including location, substantially similar to conditions affecting the franchise being offered, including terminations, cancellations, reacquisitions, nonrenewals, and other operational failures, together with existing operational franchise data.

(b) For a reasonable period only.

(c) Substantiated by data which clearly supports the projection.

(d) Accompanied by a chart showing the estimated break-even point of the franchise operation.

(e) Accompanied by appropriate caveats relating to the projection.

(f) Based upon reasonable assumptions clearly set out immediately adjacent to the projection.

(4) An advertisement shall contain the name and address of the person responsible for sponsoring or placing the advertisement, and shall identify the franchisor.

(5) If the advertisement contains an indorsement or recommendation of the franchise by a public figure, whether express or implied, the advertisement shall state that the celebrity has received, or shall receive, consideration to indorse this franchise, unless the name of the celebrity appears in the title of the franchise and the title is prominently disclosed.

(6) An advertisement of a franchise offered pursuant to exemptions under section 6(2)(c), (d), (e), (f), (g), (h), (j), or (k) of the act shall disclose fairly and accurately the relevant facts concerning the liabilities created thereunder as are necessary to make the advertisement not misleading in light of the advertising and other material to be furnished by the franchisor to the franchisee prior to the sale of the franchise.

(7) An advertisement which refers to a registered franchise under section 6(1), or to an exempted franchise under section 6(2)(a) or (b) of the act, shall contain, in letters of not less than 8-point type, the following legend:

"PURSUANT TO THE MICHIGAN FRANCHISE INVESTMENT LAW, SALES MAY NOT BE MADE UNLESS A PROSPECTUS HAS BEEN DELIVERED 1 WEEK PRIOR TO ENTERING INTO A FRANCHISE AGREEMENT OR PAYING CONSIDERATION."

(8) The franchisor shall disclose in any advertising placed in the communications media the required total initial and deferred franchise fee, or range of fees.

Notes

Mich. Admin. Code R. 445.801

1979 AC