Michigan Administrative Code › Department - Attorney General › Consumer Protection and Charitable Trusts Division › Franchises › Part 9 - DECEPTIVE OR FRAUDULENT PRACTICES › Section R. 445.901 - Enumeration of deceptive or fraudulent practices

Current through Vol. 24-12, July 15, 2024
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.