Mich. Admin. Code R. 445.901 - Enumeration of deceptive or fraudulent practices

Rule 901. Deceptive or fraudulent practices committed, directly or indirectly, in connection with the offer, sale, or purchase of a franchise include, but are not limited to, the following practices:

(a) Misrepresentation of, or failure to disclose, the required total initial and deferred franchise fee for the franchise.

(b) Misrepresentation of the training and management assistance available to the franchisee, or failure to disclose that little or none is available.

(c) Misrepresentation or failure to disclose that the franchisor does not have significant experience in the sale of the franchised product or service in this state.

(d) Failure to disclose that the franchisor does not have material information about the existence of a market for the product or service, if such is the case, or misrepresentation of that information.

(e) Misrepresentation of, or failure to disclose, the franchisor's efforts to sell or establish more franchises than it is reasonable to expect the market or market area for the particular franchise to sustain.

(f) Misrepresentation of the quantity or quality of the products or services to be sold or distributed through the franchise.

(g) Misrepresentation, or causing confusion or misunderstanding, regarding the source, sponsorship, approval, or certification of franchised goods or services.

(h) Representation that goods are new if they are deteriorated, altered, reconditioned, used, or secondhand, or failure to disclose such a condition.

(i) Misrepresentation of the number of franchisees the franchisor shall appoint or designate to operate within a given territory or shall locate within a given territory, or representation that a franchisee shall be or is the only franchisee appointed or located within a specified franchise territory when, in fact, the franchisee is not.

(j) Misrepresentation by failure to disclose, or otherwise, the termination, cancellation, reacquisition, transfer, or renewal provisions of a franchise agreement.

(k) Falsely claiming or inferring that a primary marketer, other than franchisor of trademark products or services, sponsors or participates directly or indirectly, in the franchise operation, or that the offeror has an affiliation, or connection with, or is attributed some special status by, the marketer.

(l) Representation that locations for the franchised business, facilities, machines, or other devices are secured, or shall be secured, by the franchisor when, in fact, they are not or shall not be.

(m) Representation that machines, equipment, products, or displays of a brand or kind are of a specific ability or nature when, in fact, they are not.

(n) Misrepresentation or failure to disclose that a person is being offered a franchise in a business, trade, or profession which requires a registration or license to conduct.

(o) Representation, in any manner, that goods or services are offered for sale at a reduced price when they are not.

(p) Representation of a reduction of prices charged by "comparing" prices of goods of like kind and quality, where the comparison being made is not with other goods of essentially similar quality and obtainable in the area.

(q) Representing a special price or limited offer to persons when, in fact, the offer is not limited and is being made to many persons on a mass advertising or marketing basis, or the price is the same as that charged to those occupying a status similar to that of the franchisee.

Notes

Mich. Admin. Code R. 445.901

1979 AC