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02.02.08.00.htm 02.02.08.00. Title 02 OFFICE OF THE ATTORNEY GENERAL Subtitle 02 DIVISION OF SECURITIES Chapter 08 Franchise Registration and Disclosure Authority: Business Regulation Article, §14-206, Annotated Code of Maryland
02.02.08.01.htm 02.02.08.01. 01 Definitions.. A. For purposes of this chapter and of the Maryland Franchise Registration and Disclosure Law, Business Regulation Article, Title 14, Subtitle 2, Annotated Code of Maryland, the following terms have the meanings indicated.B. Terms Defined.. 1) Except as used in the Uniform Franchise Offering Circular, "affiliate" means a person that, directly or indirectly, controls, is controlled by, or is under common control with, another person.2) "Commissioner" means t
02.02.08.02.htm 02.02.08.02. 02 Franchise.. A. Scope. The Commissioner shall consider the factors set forth in this regulation in any determination as to whether a business relationship is a franchise as defined in the Maryland Franchise Law, Business Regulation Article, §14-201(e) Annotated Code of Maryland.B. Marketing Plan. For purposes of the Maryland Franchise Law, Business Regulation Article, §14-201(e)1) Annotated Code of Maryland, "marketing plan" means a plan or system concerning a material aspec
02.02.08.03.htm 02.02.08.03. 03 Franchise Fee.. A. Scope. The Commissioner shall consider the factors set forth in this regulation in any determination as to whether a franchisee is required to pay a franchise fee, as defined in the Maryland Franchise Law, Business Regulation Article, §14-201(g) Annotated Code of Maryland.B. Form and Timing of Payment. A franchise fee includes, but is not limited to, a payment that is made before, upon, or after execution of an agreement to purchase, process, r
02.02.08.04.htm 02.02.08.04. 04 Application for Registration.. A. Form of Application. An application to register a franchise shall be prepared in accordance with the Uniform Franchise Offering Circular Guidelines adopted by the North American Securities Administrators Association, Inc. on April 25, 1993 (UFOC) which is incorporated by reference, with the modifications set forth in §B of this regulation. A copy of the UFOC may be obtained from the Division for a nominal fee and may also be found in Business
02.02.08.05.htm 02.02.08.05. 05 Initial Registration.. A. Registration File Number.. 1) Upon receipt of an application for initial registration, the Division shall assign a file number to the application.2) Correspondents shall refer to the assigned file number in all subsequent related filings and correspondence with the Division.3) An application for registration may include a stamped self-addressed envelope and a duplicate cover letter which the Division may stamp and return to the applicant as confi
02.02.08.06.htm 02.02.08.06. 06 Amendment of Registration.. A. When to File.. 1) An application for amendment of a registration statement shall be promptly filed if there is a material change in the information that a registrant previously filed with the Commissioner.2) An amendment is not required if a particular franchise agreement is changed as a result of negotiations between the franchisee and the franchisor and the franchisor agrees to the change or a similar change only on an indiv
02.02.08.07.htm 02.02.08.07. 07 Renewal of Registration.. A. Time for Submitting Renewal Application.. 1) An application to renew a registration shall be submitted to the Division not less than 15 business days before the end of 1 year from the effective date of the registration.2) If a registrant submits an application to renew a registration less than 15 days before the expiration of the prior year's registration, but before the expiration of the prior year's registration, the Commissioner may cons
02.02.08.08.htm 02.02.08.08. 08 Escrow Condition.. A. Imposition of Escrow Condition. At any time after the submission of a registration statement and upon a finding that it is necessary and appropriate for the protection of prospective franchisees or subfranchisors, the Commissioner may require a franchisor to escrow franchise fees and other funds paid by a franchisee or subfranchisor until the franchisor's obligations under the offering have been satisfied.B. Depositary. Funds subject to an escrow conditio
02.02.08.09.htm 02.02.08.09. 09 Advertising.. A. Standards For Advertising.. 1) An advertisement for a franchise offering may not refer to:. a) The purchase or sale of a franchise as a safe investment, as free from risk of loss or default, or as a guarantee or assurance of earnings or profits;b) An earnings claim, unless otherwise permitted by the Commissioner; or. c) An opinion of counsel without stating the name and address of the counsel.. 2) Advertising shall state the name and address of
02.02.08.10.htm 02.02.08.10. 10 Exemptions.. A. Basis of Exemption. Under the Maryland Franchise Law, Business Regulation Article, §14-214(b)3) Annotated Code of Maryland, the Commissioner has determined that the offers or sales described in B-G of this regulation are exempt from the registration provisions of the Maryland Franchise Law because the transactions are not within the purpose of the Maryland Franchise Law and registration of the transactions is not necessary or appropriate for t
02.02.08.11.htm 02.02.08.11. 11 Exemptions ― Form F-1.. The following form shall be filed by franchisors claiming exemptions under Regulation .10D, E, F, or G of this chapter:FORM F-1. NOTICE OF EXEMPTION UNDER THE MARYLAND FRANCHISE REGISTRATION AND DISCLOSURE LAW. Pursuant to COMAR 02.02.08.10. This Notice of Exemption shall be accompanied by a filing fee of $250.00 payable by check to: Office of the Attorney General. This Notice shall be considered filed with the Division for purposes of CO
02.02.08.12.htm 02.02.08.12. 12 Denial, Suspension, or Revocation of Registration or Exemption.. The Commissioner, with or without prior notice or hearing, may issue a cease and desist order and may deny, suspend, or revoke any registration, amendment, or claim of exemption set forth in Regulation .10 of this chapter, if the Commissioner finds that:A. The franchisor, or any of its officers, directors, agents, employees, or any other person related to the franchisor has violated or failed to compl
02.02.08.13.htm 02.02.08.13. 13 Financial Statements.. A. Scope. The following financial statements shall be prepared in accordance with this regulation:. 1) A financial statement required by the Maryland Franchise Law;. 2) A financial statement required by any regulation adopted under the Maryland Franchise Law, including the MFOC; and3) A financial statement used by or on behalf of a franchisor in connection with an offer, sale, or purchase of a franchise in Maryland.B. Standards.. 1) A financial statement
02.02.08.14.htm 02.02.08.14. 14 Reports by Registrants.. A. Time for Filing.. 1) A franchisor registered under the Maryland Franchise Law shall file a quarterly report with the Commissioner.2) The first report filed under this section shall be filed not later than 90 days after the effective date of the franchisor's registration statement.B. Content. The reports required by §A of this regulation shall include:. 1) The number of franchises sold in Maryland under the registration statement;.
02.02.08.15.htm 02.02.08.15. 15 Franchisor Records.. A. Records to Be Maintained. A franchisor offering or selling a franchise in the State shall maintain complete and accurate records of offers and sales of franchises, including but not limited to:1) Offering circulars;. 2) Advertising;. 3) Correspondence with franchisees and prospective franchisees;. 4) Past and present operations manuals;. 5) Training records;. 6) Training manuals; and. 7) Copies of executed agreements.. B. Form of Records. The r
02.02.08.16.htm 02.02.08.16. 16 Fraudulent and Prohibited Practices.. A. Scope of Antifraud Provisions. Unless otherwise indicated, the antifraud provisions of the Maryland Franchise Law, Business Regulation Article, §14-229, Annotated Code of Maryland, and this regulation apply to any offer to sell or sale of a franchise in the State regardless of whether the franchise offering is exempt from registration under the Maryland Franchise Law.B. Fraudulent Representations and Deceptive Statem
02.02.08.17.htm 02.02.08.17. 17 Interpretive Opinions.. A. Filing of Request. A request for an interpretive opinion or a no action position under the Maryland Franchise Law, Business Regulation Article, §14-209, Annotated Code of Maryland, shall be filed with the Commissioner.B. Form of Request. A request for an interpretive opinion or a no action position shall include:. 1) An original and one copy of the letter requesting the interpretive opinion or no action position; and
02.02.08.18.htm 02.02.08.18. 18 Internet Offers.. A. Any communication made through the Internet, the World Wide Web, or any other similar proprietary or common carrier electronic delivery system, of an offer to sell a franchise (Internet Offer) is exempt from the registration provisions of the Maryland Franchise Law if:1) The Internet Offer indicates, directly or indirectly, that the franchise is not being offered to residents of Maryland;2) The Internet Offer is not otherwise directed to
02.02.08.9999.htm 02.02.08.9999. Administrative History Effective date:. Regulations .01―08 adopted as an emergency provision effective December 2, 1977 (4:26 Md. R. 2005) emergency status extended at 5:8 Md. R. 587Regulations .01―08 adopted effective May 5, 1978 (5:9 Md. R. 683) (Recodified from COMAR 02.02.04 to 02.02.10)Regulations .02―08 recodified to Regulations .02―12 and amended effective May 19, 1986 (13:10 Md. R. 1154)Regulation .02C amended effective October 29, 1990 (17:21 Md. R. 2525).
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