Maryland Business Opportunity Sales Act
MD. Business Regulation Code Ann. § 14-101
CITATION:
Title 14 - Business Opportunities, Franchises, and Multilevel Distribution Companies
Subtitle 1 - Business Opportunities
Subtitle 2 - Franchises
Subtitle 3 - Multilevel Distribution Companies
Subtitle 1 - Business Opportunities
Section 14-101 - Definitions
Section 14-102 - Legislative Policy
Section 14-103 - Scope of Subtitle
Section 14-104 - Exclusions
Section 14-105 - Delegation
Section 14-106 - Orders, Regulations, and Forms
Section 14-107 - Publication of Information
Section 14-108 - Investigations
Section 14-109 - Hearings
Section 14-110 - Civil Enforcement of Subtitle
Section 14-111 - Miscellaneous Powers
Section 14-112 - Privilege Against Self-Incrimination
Section 14-113 - Registration of Business Opportunity Required
Section 14-113.1 - Registration of Business Opportunity
Section 14-114 - Disclosure Statement
Section 14-115 - Bond or Trust Account
Section 14-116 - Amendments to Documents
Section 14-117 - Renewal
Section 14-118 - Contracts for the Sale of Business Opportunities
Section 14-119 - Denial of Effectiveness to Registration, Suspension, or Revocation of Registrations
Section 14-120 - Untrue Statements or Omissions of Material Facts
Section 14-121 - Fraud or Deceit
Section 14-122 - Representations of Income or Earning Potential
Section 14-123 - Use of Commercial Symbol
Section 14-124 - Reference to Compliance
Section 14-125 - Failure to Deliver Products, Equipment, or Supplies
Section 14-126 - Remedies for Violation
Section 14-127 - False or Misleading Statement or Omission of Material Fact
Section 14-128 - General Penalty
Section 14-129 - Short Title
Section 14-101 - Definitions
(a) In this subtitle the following words have the meanings indicated.
(b) “Business opportunity” means an arrangement between a buyer and seller in which:
(1) the seller or a person recommended or referred by the seller provides to the buyer products, equipment, supplies, or services that enable the buyer to start a business;
(2) the buyer is required to pay the seller or a person recommended or referred by the seller $300 or more during the period beginning any time before commencing operations and ending 6 months after commencing operations of the business; and
(3) the seller represents, directly or indirectly, orally or in writing, that:
(i) the seller or a person recommended or referred by the seller will help the buyer in finding locations for the use or operation of vending machines, racks, display cases, or other similar devices on premises that are not owned or leased by the buyer or seller;
(ii) the seller or a person recommended or referred by the seller will help the buyer in finding outlets or accounts for the buyer’s products or services;
(iii) the seller or a person specified by the seller will buy products made, produced, fabricated, grown, bred, or modified by the buyer;
(iv) the seller guarantees that the buyer will receive from the business income an amount that exceeds the price paid to the seller;
(v) if the buyer is not satisfied with the business, the seller will refund all or part of the price paid to the seller, or repurchase any of the products, equipment, or supplies provided by the seller or a person recommended or referred by the seller; or
(vi) the seller will provide a marketing plan.
(c) “Buyer” means a person who buys or leases products, equipment, supplies, or services in connection with a business opportunity.
(d) “Commissioner” means the Securities Commissioner in the Office of the Attorney General.
(e) “Marketing plan” means advice or training that a seller or a person recommended or referred by the seller provides to the buyer, relating to the sale of any products, equipment, supplies, or services, and the advice or training includes preparing or providing:
(1) promotional literature, brochures, pamphlets, or advertising materials;
(2) training regarding the promotion, operation, or management of the business opportunity; or
(3) operational, managerial, or financial guidelines or assistance.
(f) “Seller” means a person who sells or leases products, equipment, supplies, or services in connection with a business opportunity.
Section 14-102 - Legislative Policy
The General Assembly finds that:
(1) the sale of business opportunities is a field in which investment problems and deceptive practices are common; and
(2) this subtitle is needed to regulate this field adequately and prevent these deceptive practices.
Section 14-103 - Scope of Subtitle
(a) This subtitle applies to an offer to sell or sale of a business opportunity if:
(1) the offeree or buyer is a resident of the State;
(2) the business opportunity will be or is operated in the State;
(3) the offer to sell is made in the State; or
(4) the offer to buy is accepted in the State.
(b) (1) For purposes of this section, an offer to sell is made in the State, whether or not either party is then present in the State, if the offer:
(i) originates from the State; or
(ii) is directed by the offeror to the State and is received at:
1. the place to which it is directed; or
2. a post office in the State.
(2) For purposes of this section, an offer to sell is not made in the State only because the publisher circulates or there is circulated on the publisher’s behalf in the State:
(i) a newspaper or other publication of general, regular, and paid circulation that:
1. is not published in the State; or
2. is published in the State but has had more than two-thirds of its circulation outside the State during the past 12 months; or
(ii) a radio or television program that originates outside the State and is received in the State.
(3) For purposes of this section, an offer to buy is accepted in the State if acceptance:
(i) is communicated to the offeror in the State; and
(ii) has not been communicated previously to the offeror, orally or in writing, outside the State.
(4) For purposes of this section, acceptance is communicated to the offeror in the State, whether or not either party is then present in the State, if:
(i) the offeree directs acceptance to the offeror in the State reasonably believing the offeror to be in the State; and
(ii) the acceptance is received at:
1. the place to which it is directed; or
2. a post office in the State.
Section 14-104 - Exclusions
(a) This subtitle does not apply to:
(1) a sale of an ongoing business if the owner of the business sells and intends to sell only that one business opportunity;
(2) a not-for-profit sale, for less than $500, of sales demonstration equipment, materials, or samples;
(3) an offer to sell or sale of a franchise registered or exempt from registration under Subtitle 2 of this title;
(4) an offer to sell or sale of a business if the offer or sale is regulated under the Maryland Gasohol and Gasoline Products Marketing Act or the federal Petroleum Marketing Practices Act;
(5) an offer to sell or sale of a business opportunity with a marketing plan made in conjunction with the licensing of a federally registered trademark or service mark, provided that the seller has a minimum net worth of $1,000,000 as determined on the basis of the seller’s most recent audited financial statement prepared within 13 months of the first offer that the seller makes in the State; or
(6) any other sale or transaction if the Commissioner:
(i) exempts the sale or transaction, by regulation or order, as not being within the purposes of this subtitle; and
(ii) finds the registration of the sale or transaction to be unnecessary, inappropriate, not in the public interest, or not for the protection of investors.
(b) Net worth may be determined on a consolidated basis if:
(1) at least 80% of the seller is owned by one person; and
(2) the person that owns at least 80% of the seller expressly guarantees the obligations of the seller with regard to the offer or sale of a business opportunity that the seller seeks to exclude under this paragraph.
Section 14-105 - Delegation
The Commissioner may delegate any power or duty of the Commissioner under this subtitle.
Section 14-106 - Orders, Regulations, and Forms
To enforce this subtitle, the Commissioner may pass orders and adopt regulations and forms.
Section 14-107 - Publication of Information
The Commissioner may:
(1) publish information about violations of this subtitle and of regulations adopted and orders passed under it;
(2) report to the appropriate law enforcement officer information about violations of this subtitle; and
(3) help, develop, and hold programs of public education and information about this subtitle.
Section 14-108 - Investigations
The Commissioner may investigate in or outside the State to:
(1) determine if a person has violated this subtitle;
(2) adopt regulations or forms under this subtitle; or
(3) enforce this subtitle.
Section 14-109 - Hearings
(a) The Commissioner may hold public hearings in connection with an investigation under this subtitle.
(b) Unless otherwise provided in this subtitle or in regulations adopted under it, the Commissioner shall hold hearings authorized by this subtitle in accordance with Title 10 of the State Government Article.
Section 14-110 - Civil Enforcement of Subtitle
(a) (1) Whenever the Commissioner determines that a person has engaged or is about to engage in an act or practice that constitutes a violation of this subtitle or a violation of a regulation adopted or order passed under this subtitle, the Commissioner may, without a prior hearing, pass a summary order directing the person to cease and desist from engaging in the activity that constitutes a violation.
(2) The summary order shall provide:
(i) notice of the opportunity for a hearing before the Commissioner to determine whether the cease and desist order should be vacated, modified, or entered as final; and
(ii) notice that the Commissioner shall enter the order as final if the person subject to the cease and desist order fails to request a hearing within 15 days after the receipt of the cease and desist order.
(3) Whenever the Commissioner determines after notice and a hearing that a person has engaged in any act or practice constituting a violation of this subtitle, the Commissioner may in the discretion of the Commissioner and in addition to taking any other action authorized under this subtitle:
(i) pass a final cease and desist order against the person;
(ii) bar the person from engaging in the offer and sale of business opportunities in the State; or
(iii) take any combination of the actions specified in this section.
(b) (1) The person subject to the cease and desist order may waive the right to a hearing.
(2) If a person subject to a cease and desist order waives the right to a hearing, the Commissioner is not required to hold a hearing to take any action under subsection (a)(3) of this section.
(c) (1) Whenever the Commissioner determines that any person has engaged in or is about to engage in an act or practice constituting a violation of this subtitle or a violation of a regulation or order under this subtitle, the Commissioner may sue in the circuit court to obtain one or more of the following remedies:
(i) a temporary restraining order;
(ii) a temporary or permanent injunction;
(iii) a declaratory judgment;
(iv) the appointment of a receiver or conservator for the defendant or the defendant’s assets;
(v) a freeze of the defendant’s assets;
(vi) a civil penalty up to a maximum amount of $5,000 for any single violation of this subtitle;
(vii) restitution;
(viii) rescission; or
(ix) any other relief as the court finds just.
(2) The Commissioner may not be required to post a bond in any action under this section.
Section 14-111 - Miscellaneous Powers
In connection with a hearing, investigation, or other proceeding under this subtitle, the Commissioner may:
(1) administer oaths;
(2) receive evidence; and
(3) issue subpoenas for the attendance of witnesses to testify or to produce evidence.
Section 14-112 - Privilege Against Self-Incrimination
(a) A person is not excused from attending, testifying, or producing evidence before the Commissioner, in a proceeding brought by the Commissioner, or in obedience to a subpoena of the Commissioner on the ground that the testimony or evidence may:
(1) tend to incriminate the person; or
(2) subject the person to a penalty or forfeiture.
(b) (1) If a person claims the privilege against self-incrimination as to a specific subject, and is then compelled to testify or produce evidence on that subject, the person may not be prosecuted or subjected to a penalty or forfeiture in connection with that subject.
(2) A person who testifies is not exempt from prosecution and punishment for perjury or contempt committed while testifying.
Section 14-113 - Registration of Business Opportunity Required
A person may not sell or offer to sell any business opportunity in the State or to any prospective buyer in the State unless the business opportunity is registered under this subtitle.
Section 14-113.1 - Registration of Business Opportunity
(a) In order to register a business opportunity, the seller shall file with the Commissioner one of the following disclosure documents:
(1) a uniform franchise offering circular prepared in accordance with the guidelines adopted by the North American Securities Administrators Association, Inc., as amended through January 1, 1996;
(2) a disclosure document prepared in accordance with the Federal Trade Commission rule entitled “Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures” under 16 C.F.R. Part 436;
(3) a disclosure document prepared in accordance with § 14-114 of this subtitle; or
(4) any other document that the Commissioner specifies by regulation or order.
(b) The seller shall attach to the disclosure document filed in accordance with subsection (a) of this section:
(1) the cover sheet required under § 14-114(b) of this subtitle;
(2) the consent to service of process required under subsection (c) of this section; and
(3) the filing fee required under subsection (d) of this section.
(c) (1) Every seller shall file, in a form that the Commissioner requires, an irrevocable consent appointing the Commissioner as the seller’s registered agent in any noncriminal suit, action, or proceeding against the seller or the successor or personal representative of the seller that arises under this subtitle.
(2) After the consent has been filed, the consent has the same force and validity as if served personally on the person filing the consent.
(3) Service may be made by delivering a copy of the process to the office of the Commissioner.
(4) Service made under paragraph (3) of this subsection is not effective unless:
(i) the plaintiff or petitioner, who may be the Commissioner, promptly sends notice of the service and a copy of the process by registered or certified mail to the defendant or respondent, at the address on file with the Commissioner; and
(ii) the plaintiff’s affidavit of compliance under this subsection is filed in the noncriminal suit, action, or proceeding on or before the return date of the process, if any, or within further time as the court allows.
(d) The initial fee to file an application to register a business opportunity offering is $250.
(e) (1) A business opportunity offering registration becomes effective at midnight on the 10th business day after the day on which the seller files all required documents for registration, provided that no order has been passed or proceeding is pending under § 14-119 of this subtitle.
(2) By order, the Commissioner:
(i) may waive or reduce the time period between the date of the filing and the date that the registration is effective if the seller has filed all required documents for registration; or
(ii) may postpone the date that the registration becomes effective at midnight on the 10th business day after the day on which the seller files an amendment to the registration.
(f) The registration is effective for 1 year from the date of effectiveness.
(g) The Commissioner may by regulation require the filing of all proposed literature or advertising prior to its use.
(h) The Commissioner may by regulation require the filing of sales reports.
Section 14-114 - Disclosure Statement
(a) A person may not sell or offer to sell a business opportunity unless a written disclosure document, filed under § 14–113.1(a) of this subtitle, is delivered to the buyer at least 10 full business days before the buyer executes a contract or an agreement that imposes a binding legal obligation on the buyer or the payment by a buyer of any consideration in connection with the sale or offer to sell a business opportunity.
(b) The disclosure statement shall include a cover sheet that contains only:
(1) a heading, in boldface capital letters in 10–point or larger type, that states “disclosure required by Maryland law”;
(2) under the heading, in 10–point or larger type, the following statement: “The State of Maryland has not reviewed and does not approve, recommend, endorse, or sponsor any business opportunity. The information in this disclosure statement has not been verified by the State. If you have any questions about this investment, see an attorney before you sign a contract or contact the Division of Securities in the Office of the Attorney General. You are to be given 10 business days to review this document before signing any contract or agreement or making any payment to the seller or the seller’s representative.”; and
(3) the current address and telephone number of the Division of Securities.
(c) After the cover sheet, the disclosure statement shall include the following information:
(1) the name and address of the seller;
(2) whether the seller is doing business as an individual, partnership, or corporation;
(3) the names under which the seller has done, is doing, or intends to do business;
(4) the name of any parent or affiliated company that will engage in business transactions with buyers or that takes responsibility for statements of the seller;
(5) the name, address, and title of each of the seller’s officers, directors, trustees, general partners, general managers, principal executives, and others responsible for the seller’s activities that relate to the sale of business opportunities;
(6) the names and residential addresses of the salespersons who engage in the sale or offer to sell a business opportunity in the State;
(7) prior business experience of the seller relating to business opportunities, including:
(i) the name, address, and a description of any business opportunity previously offered by the seller;
(ii) the length of time the seller has offered each business opportunity; and
(iii) the length of time the seller has conducted the business opportunity currently being offered to the buyer;
(8) a full and detailed description of the acts and services that the seller agrees to perform for the buyer;
(9) (i) whether the seller or any person described in item (5) of this subsection has been convicted of a felony, has pleaded nolo contendere to a felony charge, or has been adjudged liable in a civil action, if the felony or civil action involved fraud, embezzlement, fraudulent conversion, or misappropriation of property; and
(ii) if so, the court, date of the conviction or the judgment, and any penalty imposed or damages assessed;
(10) (i) whether the seller or any person described in item (5) of this subsection is subject to:
1. a currently effective order of the Federal Trade Commission; or
2. a currently effective order that enjoins or restricts business activity as a result of an action brought by a public agency, including an action that affects a license as a real estate broker, associate real estate broker, or real estate salesperson; and
(ii) if so, the date, nature, and issuer of the order and any penalty imposed;
(11) whether the seller or any person identified in item (5) of this subsection has filed for bankruptcy, been adjudged bankrupt, been reorganized due to insolvency, or was an owner, principal officer, or general partner of any other person that has filed bankruptcy, been adjudged bankrupt, or was reorganized due to insolvency during or within the last 7 years;
(12) a copy of the form of agreement proposed;
(13) the conditions of any financing arrangement offered directly or indirectly by the seller or an agent or affiliate of the seller;
(14) whether the buyer receives an exclusive territory;
(15) a complete description of any training that the seller promises, including the length of the training;
(16) a complete description of:
(i) any services that the seller promises will be performed in connection with the placement of the buyer’s products, equipment, or supplies at various locations; and
(ii) the kind of agreement to be made with the owner or manager of each location;
(17) a complete description of any licenses or permits that are necessary in order for the buyer to operate or engage in the business opportunity;
(18) if the seller gets a surety bond under § 14–115 of this subtitle, the following statement, or a similar statement required by the Commissioner: “As required by Maryland law, the seller has secured a bond issued by _____� (name and address of surety company), a surety company authorized to do business in the State. Before signing a contract to buy this business opportunity, you should ask the surety company about the current status of the bond.”;
(19) if the seller establishes a trust account under § 14–115 of this subtitle, the following statement, or a similar statement required by the Commissioner: “As required by Maryland law, the seller has established a trust account _____� (account number) with _____� (name and address of bank or savings institution). Before signing a contract to buy this business opportunity, you should ask the bank or savings institution about the current status of the trust account.”;
(20) the following statement: “If the seller fails to deliver the products, equipment, or supplies necessary to begin substantial operation of the business within 45 days after the delivery date stated in your contract, you may notify the seller in writing and demand that the contract be canceled.”;
(21) if the seller makes a statement about sales, earnings, or range of sales or earnings that may be made through the business opportunity, a statement of:
(i) the total number of buyers who have bought from the seller, within 3 years before the date of the disclosure statement, business opportunities that involve the products, equipment, supplies, or services being offered; and
(ii) to the seller’s knowledge, the total number of those buyers who have actually received earnings in the amount or range specified;
(22) a statement of:
(i) the total number of business opportunities that are the same or similar in nature to those that have been sold or organized by the seller;
(ii) the names and addresses of buyers who have requested a refund or rescission from the seller within the last 12 months and the number of those buyers who have received the refund or rescission; and
(iii) the total number of business opportunities that the seller intends to sell in the State within the next 12 months;
(23) a copy of the most recent audited financial statement of the seller, prepared within 13 months after the date of the first offer in the State, together with a statement of any material changes in the financial condition of the seller from the date of the most recent audited financial statement;
(24) a list of states in which this business opportunity is registered;
(25) a list of states in which the disclosure statement is on file;
(26) a list of states that have denied, suspended, or revoked the registration of this business opportunity;
(27) a section entitled “Risk Factors” containing a series of concise statements summarizing the principal factors that make this business opportunity a high risk or of a speculative nature, each statement including a cross–reference to the page on which further information regarding that risk factor may be found in the disclosure document; and
(28) any other information that the Commissioner requires by regulation or order.
Section 14-115 - Bond or Trust Account
(a) If a seller guarantees that a buyer will derive from a business opportunity income that will exceed the price paid for the business opportunity or represents that the seller will refund all or part of the price paid or repurchase the products, equipment, or supplies sold or leased by the seller if the buyer is not satisfied with the business opportunity, the seller shall:
(1) get a surety bond in favor of the State from a surety company authorized to do business in the State; or
(2) establish a trust account in favor of the State with an insured bank or savings institution in the State.
(b) The amount of the bond or trust account shall be at least $50,000.
(c) (1) A person may bring an action against the bond or trust account to recover damages resulting from:
(i) a violation of this subtitle; or
(ii) the seller’s breach of the contract for the sale of a business opportunity.
(2) The surety or trustee is liable only for actual damages up to the amount of the bond or trust account.
Section 14-116 - Amendments to Documents
The seller shall:
(1) file with the Commissioner an amendment to the documents previously submitted to the Commissioner whenever a material change in the required information occurs; and
(2) pay a fee of $50 for filing the amendment.
Section 14-117 - Renewal
(a) Unless the registration of a business opportunity is renewed for a 1-year term as provided in this section, the registration expires on the first anniversary of its effective date.
(b) Before the registration expires, the registrant periodically may renew it for an additional 1-year term, if the registrant:
(1) files with the Commissioner:
(i) a renewal application on the form that the Commissioner provides;
(ii) a current disclosure document along with any other documents or information that the Commissioner may require by order or regulation; and
(iii) proof that the seller has satisfied the bond and trust account requirements under § 14-115 of this subtitle; and
(2) pays a renewal fee of $100.
(c) The Commissioner shall renew the registration of a business opportunity if the registrant complies with the requirements of this section.
Section 14-118 - Contracts for the Sale of Business Opportunities
(a) Each contract for the sale of a business opportunity shall be in writing.
(b) The contract shall include:
(1) the terms and conditions of payment;
(2) a full and detailed description of the acts or services that the seller agrees to perform for the buyer;
(3) the address of the seller’s principal office;
(4) the name and address of the seller’s resident agent; and
(5) the approximate date that the seller will deliver to the buyer any products, equipment, or supplies.
(c) When a buyer signs a contract for the sale of a business opportunity, the seller shall give the buyer a copy of the contract.
Section 14-119 - Denial of Effectiveness to Registration, Suspension, or Revocation of Registrations
(a) The Commissioner may pass an order denying effectiveness to, or suspending or revoking the effectiveness of, any registration if the Commissioner finds that the order is in the public interest and that:
(1) (i) the registration as of its effective date, or as of any earlier date in the case of an order denying effectiveness, is incomplete in any material respect or contains any statement made that was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;
(ii) an amendment as of its effective date is incomplete in any material respect or contains any statement made that was, in light of the circumstances under which it was made, false or misleading with respect to any material fact; or
(iii) a report is incomplete in any material respect or contains any statement made that was, in light of the circumstances under which it was made, false or misleading with respect to any material fact;
(2) any provision of this subtitle or any order or condition lawfully imposed under this subtitle has been violated, in connection with the business opportunity by:
(i) the person filing the registration;
(ii) a seller, any partner, officer, or director of the seller, or any person occupying a similar status or performing similar functions as the seller; or
(iii) a person that directly or indirectly controls or is controlled by the seller if the person filing the registration is directly or indirectly controlled by or acting for the seller;
(3) except as provided in paragraph (4) of this subsection, the business opportunity registered or sought to be registered is the subject of an order denying, suspending, or revoking a registration or a permanent or temporary injunction of any court of competent jurisdiction;
(4) the seller’s enterprise or method of business, or that of the business opportunity, includes or would include activities that are illegal where performed;
(5) the business opportunity or the offering of a business opportunity has worked or tended to work a fraud upon purchasers or would so operate;
(6) there has been a failure to file any documents or information required by § 14-113.1 of this subtitle; or
(7) the seller’s literature or advertising is misleading, incorrect, incomplete, or deceptive.
(b) (1) The Commissioner may enter a denial order if the Commissioner finds that the order is in the public interest and the seller has failed to pay the proper registration fee.
(2) The Commissioner shall vacate any such order when the deficiency has been corrected.
(c) The Commissioner may not:
(1) institute a proceeding against an effective registration under subsection (a)(3) of this section more than 1 year after the date of the order or injunction relied on; or
(2) pass an order under subsection (a)(3) of this section on the basis of an order or injunction entered under any other state act unless that order or injunction was based on facts which would currently constitute grounds for an order under this section.
(d) By order, the Commissioner summarily may postpone or suspend the effectiveness of the registration pending final determination of any proceeding under this section.
(e) Upon the entry of the order, the Commissioner shall promptly notify the seller:
(1) that the order has been entered;
(2) the basis for the order; and
(3) that within 15 days after the day on which the Commissioner receives a written request by the seller, the matter will be set down for a hearing.
(f) If the seller fails to request a hearing and the Commissioner fails to order a hearing, the order shall remain in effect until the Commissioner modifies or vacates the order.
(g) If the seller requests a hearing or the Commissioner orders a hearing, the Commissioner, after providing notice of an opportunity for hearing to the seller, may modify or vacate the order or extend it until final determination.
(h) The Commissioner may not enter an order described under subsection (b) of this section without first providing to the seller notice in accordance with subsection (e) of this section, an opportunity for hearing, and written findings of fact and conclusions of law.
(i) If the Commissioner finds that the conditions which prompted its entry have changed or that it is otherwise in the public interest, the Commissioner may vacate or modify an order passed under this section.
Section 14-120 - Untrue Statements or Omissions of Material Facts
In connection with an offer to sell or sale of a business opportunity, a person may not make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading.
Section 14-121 - Fraud or Deceit
In connection with an offer to sell or sale of a business opportunity, a person may not engage in any act, practice, or course of business or employ any device, scheme, or artifice to defraud that operates or would operate as a fraud or deceit on another person.
Section 14-122 - Representations of Income or Earning Potential
In connection with an offer to sell or sale of a business opportunity, a person may not represent that the business opportunity provides income or earning potential of any kind unless:
(1) the seller has documentation to substantiate the representation; and
(2) the person discloses the documentation to the prospective buyer when the representation is made.
Section 14-123 - Use of Commercial Symbol
In connection with an offer to sell or sale of a business opportunity, a person may not use the trademark, service mark, trade name, logotype, advertising, or other commercial symbol of a business unless:
(1) the business controls the ownership interest in the seller;
(2) the business accepts responsibility for each representation that the seller makes about the business opportunity; or
(3) it is clear from the circumstances that the owner of the commercial symbol is not involved in the sale of the business opportunity.
Section 14-124 - Reference to Compliance
In connection with an offer to sell or sale of a business opportunity, a person may not make or authorize making a reference to compliance with this subtitle in an advertisement or other contact with prospective buyers other than by use of the disclosure statement or other disclosure documents required by this subtitle.
Section 14-125 - Failure to Deliver Products, Equipment, or Supplies
(a) In connection with an offer to sell or sale of a business opportunity, a person may not fail to deliver products, equipment, or supplies necessary to begin substantial operation of the business within 45 days after the delivery date stated in the contract for the sale of the business opportunity.
(b) This section does not apply if the Commissioner or a court in a civil proceeding finds that the failure is due to the conditions stated in § 2-615 of the Commercial Law Article.
Section 14-126 - Remedies for Violation
(a) (1) If a seller violates a provision of §§ 14-120 through 14-125 of this subtitle, the buyer, within 1 year after the date of a contract for the sale of a business opportunity:
(i) may void the contract; and
(ii) is entitled to receive from the seller a refund of any money paid to the seller.
(2) On receipt of the refund, the buyer shall make available to the seller any products, equipment, or supplies received from the seller at:
(i) the buyer’s address; or
(ii) the place where the products, equipment, or supplies were located when notice to void the contract was given.
(3) However, the buyer may not be unjustly enriched by exercising a remedy under this subsection.
(b) A buyer may sue for damages, including reasonable attorney’s fees, if the buyer is injured by:
(1) a violation of this subtitle; or
(2) the seller’s breach of a contract for the sale of a business opportunity.
(c) On complaint that a seller has violated this subtitle, the circuit court may enjoin the seller from further violation.
(d) The remedies in this section are in addition to any other remedy provided by law or in equity.
Section 14-127 - False or Misleading Statement or Omission of Material Fact
(a) A person who sells a business opportunity may not, in a disclosure statement or amendment to it, willfully make a false or misleading statement of a material fact or willfully omit to state a material fact required or necessary to make the statements in a disclosure statement not misleading.
(b) A person who violates this section is guilty of a felony and, on conviction, is subject for each violation to a fine not exceeding $10,000 or imprisonment not exceeding 5 years or both.
Section 14-128 - General Penalty
A person who violates this subtitle is guilty of a misdemeanor and, unless another criminal penalty is specifically provided elsewhere, on conviction, is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year or both.
Section 14-129 - Short Title
This subtitle is the Maryland Business Opportunity Sales Act.
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For more information, see here: https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gbr§ion=14-101&enactments=false
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