(815 ILCS 602/5‑5.10)
Sec. 5‑5.10. Business opportunity.
(a) "Business opportunity" means a contract or agreement, between a seller and purchaser, express or implied, orally or in writing, wherein it is agreed that the seller or a person recommended by the seller shall provide to the purchaser any product, equipment, supplies or services enabling the purchaser to start a business when the purchaser is required to make a payment to the seller or a person recommended by the seller and the seller represents directly or indirectly, orally or in writing, any of the following, that:
(1) the seller or a person recommended by the seller |
| will provide or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases or other similar devices, on premises neither owned nor leased by the purchaser or seller; | |
(2) the seller or a person recommended by the seller |
| will provide or assist the purchaser in finding outlets or accounts for the purchaser's products or services; | |
(3) the seller or a person specified by the seller |
| will purchase any or all products made, produced, fabricated, grown, bred or modified by the purchaser; | |
(4) the seller guarantees that the purchaser will |
| derive income from the business which exceeds the price paid to the seller; | |
(5) 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 by the seller, if the purchaser is dissatisfied with the business; or | |
(6) the seller will provide a marketing plan, |
| provided that this Law shall not apply to the sale of a marketing plan made in conjunction with the licensing of a federally registered trademark or federally registered service mark. | |
(b) "Business opportunity" does not include:
(1) any offer or sale of an ongoing business |
| operated by the seller and to be sold in its entirety; | |
(2) any offer or sale of a business opportunity to |
| an ongoing business where the seller will provide products, equipment, supplies or services which are substantially similar to the products, equipment, supplies or services sold by the purchaser in connection with the purchaser's ongoing business; | |
(3) any offer or sale of a business opportunity |
| which is a franchise as defined by the Franchise Disclosure Act of 1987; | |
(4) any offer or sale of a business opportunity |
| which is registered pursuant to the Illinois Securities Law of 1953; | |
(5) (blank);
(6) any offer or sale of a business opportunity by |
| an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian or conservator or a judicial offer or sale, of a business opportunity; or | |
(7) cash payments made by a purchaser not exceeding |
| $500 and the payment is made for the not‑for‑profit sale of sales demonstration equipment, material or samples, or the payment is made for product inventory sold to the purchaser at a bona fide wholesale price. | |
(Source: P.A. 91‑357, eff. 7‑29‑99; 91‑809, eff. 1‑1‑01; 92‑308, eff. 1‑1‑02.) |
(815 ILCS 602/5‑5.15)
Sec. 5‑5.15. Marketing plan. "Marketing plan" means advice or training, provided to the purchaser by the seller or a person recommended by the seller, pertaining specifically to the sale of any enterprise, product, equipment, supplies or services and the advice or training includes, without limitation, preparing or providing:
(1) promotional literature, brochures, pamphlets, or |
| |
(2) training, regarding the promotion, operation or |
| management of the business opportunity; or | |
(3) operational, managerial, or financial guidelines |
| or assistance or continuing technical support. | |
(Source: P.A. 92‑308, eff. 1‑1‑02.) |
(815 ILCS 602/5‑15)
Sec. 5‑15. Denial or revocation of exemptions.
(a) The Secretary of State may by order deny or revoke any exemption specified in Section 5‑10 of this Law with respect to a particular offering of one or more business opportunities. No such order may be entered without appropriate prior notice to all interested parties, opportunity for hearing, and written findings of fact and conclusions of law.
(b) If the public interest or the protection of purchasers so requires, the Secretary of State may by summary order deny or revoke any of the specified exemptions pending final determination of any proceedings under this Section. Upon the entry of the order, the Secretary of State shall promptly notify all interested parties that it has been entered and of the reasons therefor and that the matter will be set for hearing upon written request filed with the Secretary of State within 30 days after the receipt of the request by the respondent. If no hearing is requested and none is ordered by the Secretary of State, the order will remain in effect until it is modified or vacated by the Secretary of State. If a hearing is requested and none is ordered by the Secretary of State, the order will remain in effect until it is modified or vacated by the Secretary of State. If a hearing is requested or ordered, the Secretary of State, after notice of an opportunity for hearing to all interested persons, may modify or vacate the order or extend it until final determination.
(c) No order under this Section may operate retroactively.
(d) No person may be considered to have violated Section 5‑25 by reason of any offer or sale effected after the entry of an order under paragraph (1) of Section 5‑65 of this Law if he or she sustains the burden of proof that he or she did not know, and in the exercise of reasonable care could not have known, of the order.
(e) Notwithstanding any provision to the contrary, this Law shall not apply to (i) any dealer, salesperson, or investment adviser registered under the Illinois Securities Law of 1953 or any investment adviser representative, or any person who is regularly engaged in the business of offering or selling securities in a transaction exempted under subsection C, H, M, R, Q, or S of Section 4 of the Illinois Securities Law of 1953 or subsection G of Section 4 of the Illinois Securities Law of 1953 provided that such person is registered under the federal securities law, (ii) an associated person described in subdivision (h)(2) of Section 15 of the Federal 1934 Act, (iii) an investment adviser registered under Section 203 of the Federal 1940 Investment Advisors Act, or (iv) a person described in subdivision (a)(11) of Section 202 of the Federal 1940 Investment Advisors Act.
(f) This Law shall not be deemed to apply in any manner, directly or indirectly, to: (i) a State bank or national bank, as those terms are defined in the Illinois Banking Act, or any subsidiary of a State bank or national bank; (ii) a bank holding company, as that term is defined in the Illinois Bank Holding Company Act of 1957, or any subsidiary of a bank holding company; (iii) a foreign banking corporation, as that term is defined in the Foreign Banking Office Act, or any subsidiary of a foreign banking corporation; (iv) a representative office, as that term is defined in the Foreign Bank Representative Office Act, (v) a corporate fiduciary, as that term is defined in the Corporate Fiduciary Act, or any subsidiary of a corporate fiduciary; (vi) a savings bank organized under the Savings Bank Act, or a federal savings bank organized under federal law, or any subsidiary of a savings bank or federal savings bank; (vii) a savings bank holding company organized under the Savings Bank Act, or any subsidiary of a savings bank holding company; (viii) an association or federal association, as those terms are defined in the Illinois Savings and Loan Act of 1985, or any subsidiary of an association or federal association; (ix) a foreign savings and loan association or foreign savings bank subject to the Illinois Savings and Loan Act of 1985, or any subsidiary of a foreign savings and loan association or foreign savings bank; or (x) a savings and loan association holding company, as that term is defined in the Illinois Savings and Loan Act of 1985, or any subsidiary of a savings and loan association holding company.
(Source: P.A. 89‑209, eff. 1‑1‑96; 90‑70, eff. 7‑8‑97.) |
(815 ILCS 602/5‑20)
Sec. 5‑20. Burden of proof and evidentiary matters.
(a) In any administrative, civil, or criminal proceeding related to this Law, the burden of proving an exemption, an exception from a definition or an exclusion from this Law is upon the person claiming it.
(b) In any action, administrative, civil, or criminal, a certificate under the seal of the State of Illinois, signed by the Secretary of State, attesting to the filing of or the absence of any filing of any document or record with the Secretary of State under this Act, shall constitute prima facie evidence of such filing or of the absence of the filing, and shall be admissible in evidence in any administrative, criminal, or civil action.
(c) In any administrative, civil, or criminal action, the Secretary of State may issue a certificate under the seal of the State of Illinois, signed by the Secretary of State, showing that any document or record is a true and exact copy, photocopy or otherwise, of the record or document on file with the Secretary of State under this Act; and such certified document or record shall be admissible in evidence with the same effect as the original document or record would have if actually produced.
(d) Any certificate pursuant to subsection (b) or (c) of this Section shall be furnished by the Secretary of State upon an application therefor in the form and manner prescribed by the Secretary of State by rule, and shall be accompanied by payment of a non‑refundable certification fee in the amount specified by rule or by order of the Secretary of State.
(Source: P.A. 92‑308, eff. 1‑1‑02.) |
(815 ILCS 602/5‑30)
Sec. 5‑30. Registration.
(a) In order to register a business opportunity, the seller shall file with the Secretary of State one of the following disclosure documents with the appropriate cover sheet as required by subsection (b) of Section 5‑35 of this Law, a consent to service of process as specified in subsection (b) of this Section, and the appropriate fee as required by subsection (c) of this Section which is not returnable in any event:
(1) The Business Opportunity Disclosure Document
| which the Secretary of State may prescribe by rule or regulation; or | |
(2) A disclosure document prepared pursuant to the |
| Federal Trade Commission rule entitled Disclosure Requirements and Prohibitions Concerning Franchising, 16 C.F.R. Part 436, or the Federal Trade Commission rule entitled Disclosure Requirements and Prohibitions Concerning Business Opportunities, 16 C.F.R. Part 437, as they may be amended; or | |
(3) A disclosure document prepared pursuant to |
| subsection (b) of Section 5‑35 of this Law. | |
(b) Every seller shall file, in the form as the Secretary of State may prescribe, an irrevocable consent appointing the Secretary of State or the successor in office to be the seller's attorney to receive service of any lawful process in any noncriminal suit, action or proceeding against the seller or the seller's successor, executor or administrator which arises under this Law after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. Service may be made by delivering a copy of the process in the office of the Secretary of State, but is not effective unless the plaintiff or petitioner in a suit, action or proceeding, forthwith sends notice of the service and a copy of the process by registered or certified mail, return receipt requested, to the defendant's or respondent's most current address on file with the Secretary of State, and the plaintiff's affidavit of compliance with this subsection is filed in the case on or before the return date of the process, if any, or within such further time as the court allows.
(c)(1) The Secretary of State shall by rule or |
| regulation impose and shall collect fees necessary for the administration of this Law including, but not limited to, fees for the following purposes: | |
(A) filing a disclosure document and renewal fee;
(B) interpretive opinion fee;
(C) acceptance of service of process pursuant to |
| subsection (b) of Section 5‑145; | |
(D) issuance of certification pursuant to |
| |
(E) late registration fee pursuant to Section |
| |
(2) The Secretary of State may, by rule or |
| regulation, raise or lower any fee imposed by, and which he or she is authorized by law to collect under this Law. | |
(d) A registration automatically becomes effective upon the expiration of the 10th full business day after a complete filing, provided that no order has been issued or proceeding pending under Section 5‑45 of this Law. The Secretary of State may by order waive or reduce the time period prior to effectiveness, provided that a complete filing has been made. The Secretary of State may by order defer the effective date until the expiration of the 10th full business day after the filing of any amendment.
(e) The registration is effective for one year commencing on the date of effectiveness and may be renewed annually upon the filing of a current disclosure document accompanied by any documents or information that the Secretary of State may by rule or regulation or order require. The annual renewal fee shall be in the same amount as the initial registration fee as established under subsection (c) of Section 5‑30 of this Law which shall not be returnable in any event. Failure to renew upon the close of the one year period of effectiveness will result in expiration of the registration. The Secretary of State may by rule or regulation or order require the filing of a sales report.
(f) The Secretary of State may by rule or regulation or order require the filing of all proposed literature or advertising prior to its use.
(g) Notwithstanding the foregoing, applications for renewal of registration of business opportunities may be filed within 30 days following the expiration of the registration provided that the applicant pays the annual registration fee together with an additional amount equal to the annual registration fee and files any other information or documents that the Secretary of State may prescribe by rule or order. Any application filed within 30 days following the expiration of the registration shall be automatically effective as of the time of the earlier expiration provided that the proper fee has been paid to the Secretary of State.
(Source: P.A. 96‑648, eff. 10‑1‑09.) |
(815 ILCS 602/5‑35)
Sec. 5‑35. Disclosure requirements.
(a) It shall be unlawful for any person to offer or, sell any business opportunity required to be registered under this Law unless a written disclosure document as filed under subsection (a) of Section 5‑30 of this Law is delivered to each purchaser at least 14 days prior to the execution by a purchaser of any contract or agreement imposing a binding legal obligation on the purchaser or the payment by a purchaser of any consideration in connection with the offer or sale of the business opportunity.
(b) The disclosure document shall have a cover sheet which is entitled, in at least 10‑point bold type, "DISCLOSURE REQUIRED BY THE STATE OF ILLINOIS." Under the title shall appear the statement in at least 10‑point bold type that "THE REGISTRATION OF THIS BUSINESS OPPORTUNITY DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE STATE OF ILLINOIS. THE INFORMATION CONTAINED IN THIS DISCLOSURE DOCUMENT HAS NOT BEEN VERIFIED BY THIS STATE. IF YOU HAVE ANY QUESTIONS OR CONCERNS ABOUT THIS INVESTMENT, SEEK PROFESSIONAL ADVICE BEFORE YOU SIGN A CONTRACT OR MAKE ANY PAYMENT. YOU ARE TO BE PROVIDED 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". The seller's name and principal business address, along with the date of the disclosure document shall also be provided on the cover sheet. No other information shall appear on the cover sheet. The disclosure document shall contain the following information unless the seller uses a disclosure document as provided in paragraph (1) or (2) of subsection (a) of Section 5‑30 of this Law:
(1) The names and residential addresses of those
| salespersons who will engage in the offer or sale of the business opportunity in this State. | |
(2) The name of the seller, whether the seller is |
| doing business as an individual, partnership or corporation; the names under which the seller has conducted, is conducting or intends to conduct business; and the name of any parent or affiliated company that will engage in business transactions with purchasers or which will take responsibility for statements made by the seller. | |
(3) The names, addresses and titles of the seller's |
| officers, directors, trustees, general managers, principal executives, agents, and any other persons charged with responsibility for the seller's business activities relating to the sale of the business opportunity. | |
(4) Prior business experience of the seller relating |
| to business opportunities including: | |
(A) The name, address, and a description of any |
| business opportunity previously offered by the seller; | |
(B) The length of time the seller has offered |