Md. Code, Business Regulation, Title 14

Md. Code, Business Regulation, Title 14
in effect

Md. Code, Business Regulation § 14-101

(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.

Md. Code, Business Regulation § 14-102

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.

Md. Code, Business Regulation § 14-103

(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.

Md. Code, Business Regulation § 14-104

(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.

Md. Code, Business Regulation § 14-107

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.

Md. Code, Business Regulation § 14-108

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.

Md. Code, Business Regulation § 14-109

(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.

Md. Code, Business Regulation § 14-110

(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.

Md. Code, Business Regulation § 14-111

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.

Md. Code, Business Regulation § 14-112

(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.

Md. Code, Business Regulation § 14-113

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.

Md. Code, Business Regulation § 14-113.1

§14–113.1. (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.

Md. Code, Business Regulation § 14-114

(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.

Md. Code, Business Regulation § 14-115

(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.

Md. Code, Business Regulation § 14-116

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.

Md. Code, Business Regulation § 14-117

(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.

Md. Code, Business Regulation § 14-118

(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.

Md. Code, Business Regulation § 14-119

(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.

Md. Code, Business Regulation § 14-120

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.

Md. Code, Business Regulation § 14-121

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.

Md. Code, Business Regulation § 14-122

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.

Md. Code, Business Regulation § 14-123

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.

Md. Code, Business Regulation § 14-124

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.

Md. Code, Business Regulation § 14-125

(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.

Md. Code, Business Regulation § 14-126

(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.

Md. Code, Business Regulation § 14-127

(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.

Md. Code, Business Regulation § 14-128

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.

Md. Code, Business Regulation § 14-201

(a) In this subtitle the following words have the meanings indicated. (b) “Advertisement” means a communication that: (1) is published in connection with an offer to sell or sale of a franchise; and (2) is: (i) written or printed; (ii) made by means of a recorded telephone message; or (iii) spoken on radio, television, or similar communications media. (c) “Area franchise” means an agreement between a franchisor and subfranchisor in which, for consideration, the subfranchisor is granted the right to sell or negotiate the sale of franchises in the name of or for the franchisor. (d) “Commissioner” means the Securities Commissioner in the Office of the Attorney General. (e) (1) “Franchise” means an expressed or implied, oral or written agreement in which: (i) a purchaser is granted the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system prescribed in substantial part by the franchisor; (ii) the operation of the business under the marketing plan or system is associated substantially with the trademark, service mark, trade name, logotype, advertising, or other commercial symbol that designates the franchisor or its affiliate; and (iii) the purchaser must pay, directly or indirectly, a franchise fee. (2) “Franchise” includes an area franchise. (f) (1) “Franchise fee” means a charge or payment that a franchisee or subfranchisor is required or agrees to pay for the right to enter into a business under a franchise agreement. (2) “Franchise fee” includes payment for goods or services. (3) “Franchise fee” does not include: (i) the purchase of or agreement to purchase goods at a wholesale price; (ii) the payment of a reasonable service charge to the issuer of a credit card by an establishment that accepts the credit card; (iii) the amount paid to a licensed trading stamp company by a person issuing trading stamps in connection with the retail sale of goods or services; (iv) the purchase of or agreement to purchase goods on consignment, if the proceeds remitted by the franchisee from the sale are the wholesale price of the goods; (v) the repayment by a franchisee of a bona fide loan that the franchisor has made to the franchisee; (vi) the purchase of or agreement to purchase goods at a retail price subject to a commission or compensation plan that in substance is a wholesale transaction; (vii) the purchase of or agreement to purchase, at their fair market value, supplies or fixtures that are needed to enter into the business or continue the business under a franchise agreement; (viii) the purchase or lease of or agreement to purchase or lease, at its fair market value, real property that is needed to enter into the business or continue the business under a franchise agreement; and (ix) the amount paid for sales demonstration material and equipment, sold at no profit by the seller, for use in making sales and not for resale. (g) “Franchisee” means a person to whom a franchise is granted. (h) “Franchisor” means a person who grants a franchise. (i) “Subfranchisor” means a person to whom an area franchise is granted.

Md. Code, Business Regulation § 14-202

(a) The General Assembly finds that: (1) the widespread sale of franchises has created many investment and business problems; and (2) franchisees have suffered substantial losses when the franchisor or its representative has not given complete information about: (i) the franchisor-franchisee relationship; (ii) the franchise agreement; and (iii) the business experience of the franchisor or its representative. (b) The intent of this subtitle is to: (1) give each prospective franchisee necessary information about any franchise offer; (2) prohibit the sale of franchises if the sale would lead to fraud or a likelihood that the franchisor’s representations would not be fulfilled; and (3) protect the franchisor-franchisee relationship.

Md. Code, Business Regulation § 14-203

(a) This subtitle applies to an offer to sell or sale of a franchise if: (1) the franchisee must pay a franchise fee of more than $100; and (2) (i) the offeree or franchisee is a resident of the State; (ii) the franchised business will be or is operated in the State; (iii) the offer to sell is made in the State; or (iv) 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 if the offer: (i) originates from the State; or (ii) is directed by the offeror to the State and is received at the place to which it is directed. (2) For purposes of this section, an offer to sell is not made in the State only because the franchisor circulates or there is circulated on the franchisor’s behalf in the State an advertisement in: (i) a newspaper or other publication of general, regular, and paid circulation that has had two-thirds of its circulation outside the State during the past 12 months; or (ii) a radio or television broadcast 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 when acceptance is communicated to the offeror in the State. (4) For purposes of this section, acceptance is communicated to the offeror in the State when: (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 the place to which it is directed. (c) This subtitle does not apply to the renewal or extension of an existing franchise if there is no interruption in the operation of the franchised business.

Md. Code, Business Regulation § 14-204

The powers, remedies, procedures, and penalties of this subtitle are in addition to and not in limitation of any other powers, remedies, procedures, and penalties provided by law.

Md. Code, Business Regulation § 14-207

(a) The Commissioner may publish information about violations of this subtitle. (b) Under regulations that the Commissioner adopts, the Commissioner may make available to any person any information submitted to the Commissioner.

Md. Code, Business Regulation § 14-208

The Commissioner may: (1) investigate in or outside the State to: (i) determine if a person has violated this subtitle or a regulation adopted or order passed under it; (ii) adopt regulations or forms under this subtitle; or (iii) enforce this subtitle; and (2) require or allow a person to submit a written statement, under oath or otherwise as the Commissioner determines, about the matter being investigated.

Md. Code, Business Regulation § 14-209

(a) On request, the Commissioner may issue an interpretive opinion. (b) (1) A request for an interpretive opinion shall be in writing. (2) The requester shall pay a fee of $100.

Md. Code, Business Regulation § 14-210

(a) (1) Whenever the Commissioner finds that a person has violated or is about to violate this subtitle or a regulation adopted or order passed under it, the Commissioner may order the person to cease and desist from the further offer to sell or sale of the franchise until the offer or sale complies with this subtitle. (2) After passage of a cease and desist order, the alleged violator may submit to the Commissioner a written request for a hearing. (3) The hearing shall begin: (i) within 15 business days after the Commissioner receives the request for a hearing; or (ii) at a later date, with the consent of the alleged violator. (4) Unless there is a timely hearing, the cease and desist order is rescinded. (b) (1) Whenever the Commissioner finds that a person has violated or is about to violate this subtitle or a regulation adopted or order passed under it, the Commissioner may sue in the circuit court to enjoin the violation or enforce this subtitle or the regulation or order. (2) The court shall: (i) determine if a violation of this subtitle has been or is about to be committed; and (ii) if so, pass any order the court considers necessary to prevent the violation or remove the effects of the violation and prevent it from continuing or being renewed in the future. (3) The court may exercise all equitable powers necessary for this purpose, including: (i) injunction; (ii) revocation, forfeiture, or suspension of the charter authority or privileges of a business organization operating under the laws of the State; (iii) dissolution of a corporation or association organized under the laws of the State; (iv) suspension or termination of the right of a corporation or association organized under the laws of another state or country to do business in the State; (v) restitution; (vi) restraining order; (vii) award of damages to be paid by a franchisor or subfranchisor to a person injured by a violation of this subtitle; and (viii) appointment of a receiver or conservator. (4) The court may not require the Commissioner to post bond. (c) The Commissioner may not exercise a power under this section more than 3 years after the violation occurs.

Md. Code, Business Regulation § 14-211

(a) (1) The Commissioner may refer to the State’s Attorney evidence of a criminal violation of this subtitle. (2) With or without the referral of evidence, a State’s Attorney may bring appropriate criminal proceedings under this subtitle. (b) A criminal proceeding may not be brought more than 3 years after the alleged violation.

Md. Code, Business Regulation § 14-212

In connection with an investigation or proceeding under this subtitle, the Commissioner may: (1) administer oaths; (2) receive evidence; and (3) issue subpoenas for the attendance of witnesses to: (i) testify; or (ii) produce evidence.

Md. Code, Business Regulation § 14-213

(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.

Md. Code, Business Regulation § 14-214

(a) Except as otherwise provided in this subtitle, a person must register the offer of a franchise with the Commissioner before the person offers to sell, through advertisement or otherwise, or sells the franchise in the State. (b) The registration requirement of this section does not apply to: (1) a transaction by an executor, administrator, sheriff, receiver, trustee in bankruptcy, guardian, or conservator; (2) an offer to sell or sale of a franchise that is substantially similar to a franchise already owned by the offeree or buyer; and (3) any other transaction that the Commissioner exempts by regulation because: (i) the transaction is not within the purpose of this subtitle; and (ii) the registration of the transaction is not necessary or appropriate in the public interest or for the protection of investors. (c) (1) The registration requirement of this section does not apply to the offer to sell or sale of a franchise by a franchisee for the franchisee’s own account, or the offer to sell or sale of the entire area franchise owned by a subfranchisor for the subfranchisor’s own account. (2) A sale is not effected by or through a franchisor merely because a franchisor has a right to approve or disapprove a different franchisee. (d) (1) The Commissioner may require by regulation that a franchisor or subfranchisor who claims under subsection (b)(3) of this section to be exempt from the registration requirements of this section: (i) file with the Commissioner a notice of claim of exemption in the form that the Commissioner requires; and (ii) pay a fee of $250. (2) The franchisor or subfranchisor shall sign and verify the notice of claim of exemption.

Md. Code, Business Regulation § 14-215

(a) Except as otherwise provided in this section, an applicant for registration shall: (1) file with the Commissioner: (i) an application in the form that the Commissioner requires; and (ii) a prospectus for the franchise; and (2) pay an application fee of $500. (b) Instead of the application for registration and prospectus described in subsection (a) of this section, the Commissioner may accept an application for registration and prospectus that: (1) are found by the Commissioner to include disclosure requirements similar to those of this subtitle; and (2) are: (i) required by a unit of the federal government or another state government; or (ii) approved by an association of administrators of state franchise laws. (c) The applicant shall sign and verify the application for registration.

Md. Code, Business Regulation § 14-216

(a) The prospectus shall contain: (1) the material information set forth in the application for registration, as required by regulation of the Commissioner; and (2) any other disclosures that the Commissioner requires. (b) The prospectus shall state, in 10-point or larger bold type, that registration is not approval, recommendation, or endorsement by the Commissioner. (c) The prospectus shall include the following information: (1) the name of the franchisor; (2) the name under which the franchisor does or intends to do business; (3) the name of any parent or affiliated company that engages in business transactions with franchisees; (4) the address of the principal office of the franchisor; (5) the name and address of the resident agent of the franchisor; (6) whether the franchisor does business as an individual, partnership, or corporation; (7) information about the identity and business experience of persons affiliated with the franchisor, as the Commissioner requires; (8) (i) whether any person identified in the prospectus has been convicted of a felony, has pleaded nolo contendere to a felony charge, or has been adjudged liable in a civil action by final judgment, 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; (9) (i) whether any person identified in the prospectus is subject to: 1. a currently effective order of the Securities and Exchange Commission, or the securities administrator of a state, that denies registration to or suspends or revokes the registration of the person as a securities broker, securities dealer, or investment adviser; 2. a currently effective order of a national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, that suspends or expels the person from membership in the Association or Exchange; 3. a currently effective order of the Federal Trade Commission; or 4. 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; (10) the length of time the franchisor has: (i) conducted business of the type to be operated by a franchisee; (ii) granted franchises for that business; and (iii) granted franchises in other lines of business; (11) a recent financial statement of the franchisor and a statement of each material change in the financial condition of the franchisor since the financial statement was made; (12) a copy of the typical franchise agreement used or proposed for use in the State; (13) the franchise fee or, if the franchise fee is not the same in each case, the formula that the franchisor uses to set the amount of the franchise fee and the way the franchisor will apply the franchise fee; (14) any payment other than a franchise fee that the franchisee or subfranchisor must pay to the franchisor, including any royalty or payment that the franchisor collects wholly or partly for a third party; (15) the conditions under which the franchisor may terminate, refuse to renew, or repurchase the franchise; (16) a description of all goods, fixtures, and services that, under the franchise agreement or by practice, the franchisee or subfranchisor must buy from the franchisor or a designee of the franchisor; (17) whether, under the franchise agreement or by practice, the franchisee is limited in the goods or services that the franchisee may offer to customers; (18) the conditions of any financing arrangement offered directly or indirectly by the franchisor or an agent or affiliate of the franchisor; (19) any past or present practice or any intent of the franchisor to sell, assign, or discount to a third party, wholly or partly, a note, contract, or other obligation of the franchisee or subfranchisor; (20) a copy of any statement of estimated or projected franchisee earnings prepared for presentation to prospective franchisees, subfranchisors, or others and a statement of the information on which the estimation or projection is based; (21) any compensation or other benefit given or promised to a public figure that arises wholly or partly from: (i) the use of the public figure in the name or symbol of the franchise; or (ii) the endorsement or recommendation of the franchise by the public figure; (22) the number of franchises currently operating or proposed to be sold, as the Commissioner requires by regulation; (23) whether franchisees or subfranchisors receive an exclusive territory or area franchise; (24) an authorization for the Commissioner to examine the applicant’s financial records that relate to the sale of franchises; (25) an irrevocable consent to be sued in the State; (26) appointment of the Commissioner as attorney to receive service of process for the franchisor; (27) any other information that the franchisor wants to give; and (28) any other information that the Commissioner reasonably requires. (d) If the applicant is a subfranchisor, the application shall include the same information about the subfranchisor as is required from the franchisor under this section. (e) The Commissioner by regulation may: (1) set the form and content of financial statements required under this subtitle; (2) state the circumstances under which consolidated financial statements may be submitted; and (3) state the circumstances under which financial statements shall be audited by an independent certified public accountant or other public accountant.

Md. Code, Business Regulation § 14-217

(a) If the Commissioner finds that it is necessary and appropriate for the protection of prospective franchisees or subfranchisors because a franchisor has not made adequate financial arrangements to fulfill the franchisor’s obligations under an offering, the Commissioner may require the franchisor to escrow franchise fees or other money paid by a franchisee or subfranchisor until the obligations have been satisfied. (b) (1) At the option of the franchisor, the franchisor may post an adequate surety bond as provided by regulations of the Commissioner. (2) The total liability of the surety under the bond may not exceed the penal sum of the bond.

Md. Code, Business Regulation § 14-218

(a) The Commissioner shall register an offer of a franchise if it meets the requirements of this subtitle. (b) Unless a stop order is in effect, registration of the offer of a franchise automatically takes effect at: (1) noon on the 30th business day after an application for registration or the last amendment to it is filed; or (2) an earlier time that the Commissioner sets.

Md. Code, Business Regulation § 14-219

(a) (1) Unless registration of an offer of a franchise is renewed for a 1-year term as provided in this section, the registration expires on the first anniversary of its effective date. (2) However, the Commissioner by regulation or order may set a different term of registration. (b) (1) Before registration expires, the registrant periodically may renew it for an additional 1-year term, if the registrant: (i) at least 15 business days before the expiration of registration files with the Commissioner: 1. a renewal application on the form that the Commissioner provides; and 2. a prospectus; (ii) otherwise is entitled to be registered; and (iii) pays a renewal fee of $250. (2) The registrant shall sign and verify the renewal application. (3) The Commissioner by order may allow a registrant to submit a renewal application after the 15th business day before expiration of the registration. (c) The Commissioner shall renew the registration of an offer of a franchise if it meets the requirements of this section. (d) Unless a stop order or other order is in effect under this subtitle, renewal of the registration of the offer of a franchise automatically takes effect at: (1) noon on the day when the previous registration is due to expire; or (2) an earlier time that the Commissioner sets.

Md. Code, Business Regulation § 14-220

(a) If there is a material change in the information that a registrant previously filed with the Commissioner, the franchisor shall: (1) file promptly with the Commissioner an application to amend the registration; and (2) pay a fee of $100. (b) The registrant shall sign and verify the application to amend the registration. (c) The Commissioner by regulation may state: (1) what constitutes a material change; and (2) the circumstances under which a revised prospectus shall accompany an application to amend the registration. (d) If the Commissioner approves the amendment to the registration, the amendment takes effect on the date the Commissioner sets after considering the public interest and the protection of franchisees.

Md. Code, Business Regulation § 14-221

The Commissioner summarily may pass a stop order to deny, suspend, or revoke a registration if the Commissioner finds that: (1) there has been a violation of this subtitle or a regulation adopted under it; (2) the offer to sell or sale of the franchise would constitute misrepresentation to, deceit of, or fraud on the buyer; (3) a person identified in an application has been convicted of an offense or has had a civil judgment entered against the person as described in § 14-216(c)(8) of this subtitle or is subject to an order described in § 14-216(c)(9) of this subtitle, and the involvement of the person in the sale or management of the franchise creates an unreasonable risk to prospective franchisees; (4) the prospectus or amendment to it is incomplete or inaccurate in any material respect; (5) the prospectus or amendment to it includes a false or misleading statement of a material fact or omits to state a material fact required to be stated in the prospectus or amendment or necessary to make the statements in the prospectus or amendment not misleading; (6) in connection with an offer to sell or sale of a franchise, a person in the State is engaging or is about to engage in a false, fraudulent, or deceptive practice or in a device, scheme, or artifice to defraud; or (7) the financial condition of the franchisor affects or will affect the ability of the franchisor to meet an obligation under the franchise or other agreement and the franchisor is not able or willing to comply or has failed to comply with a regulation, order, or administrative determination of the Commissioner under § 14-217 of this subtitle.

Md. Code, Business Regulation § 14-222

(a) After passing a stop order, the Commissioner promptly shall send to the applicant or registrant a notice that: (1) states that the stop order has been passed; (2) states the reasons for the stop order; and (3) informs the applicant or registrant of the right to a hearing under this section. (b) (1) The applicant or registrant may submit to the Commissioner a written request for a hearing on the stop order. (2) The Commissioner shall schedule a hearing within 15 business days after the Commissioner receives the request unless the applicant or registrant consents to a later date. (3) The Commissioner may schedule a hearing even if the applicant or registrant does not request a hearing. (c) (1) If a hearing is not requested and is not scheduled by the Commissioner and therefore is not held, the stop order remains in effect until the Commissioner modifies or vacates it. (2) If a hearing is held, after the hearing, the Commissioner may modify or vacate the stop order or extend it until the Commissioner makes a final determination. (3) The Commissioner may modify or vacate a stop order if the Commissioner finds that: (i) conditions have changed; or (ii) it is otherwise in the public interest to vacate or modify the stop order.

Md. Code, Business Regulation § 14-223

A franchisor may not sell a franchise in the State without first giving a prospective franchisee a copy of the offering prospectus and a copy of each proposed agreement that relates to the sale of the franchise at the earlier of: (1) 14 calendar days before the execution by the prospective franchisee of any binding agreement with the franchisor; (2) 14 calendar days before payment of any consideration that relates to the franchise relationship; or (3) a reasonable request by a prospective franchisee to receive a copy of the offering prospectus.

Md. Code, Business Regulation § 14-225

A person may not publish an advertisement offering to sell a franchise subject to registration under this subtitle unless: (1) the person submits a copy of the advertisement to the Commissioner for review at least 7 business days before the first publication of the advertisement unless the Commissioner by regulation or order allows a later submission; or (2) the advertisement is exempted from review by regulation of the Commissioner.

Md. Code, Business Regulation § 14-226

As a condition of the sale of a franchise, a franchisor may not require a prospective franchisee to agree to a release, assignment, novation, waiver, or estoppel that would relieve a person from liability under this subtitle.

Md. Code, Business Regulation § 14-227

(a) (1) A person who sells or grants a franchise is civilly liable to the person who buys or is granted a franchise if the person who sells or grants a franchise offers to sell or sells a franchise: (i) without the offer of the franchise being registered under this subtitle; or (ii) by means of an untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading, if the person who buys or is granted a franchise does not know of the untruth or omission. (2) In determining liability under this subsection, the person who sells or grants a franchise has the burden of proving that the person who sells or grants a franchise did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. (b) The person who buys or is granted a franchise may sue under this section to recover damages sustained by the grant of the franchise. (c) A court may order the person who sells or grants a franchise to: (1) rescind the franchise; and (2) make restitution to the person who buys or is granted a franchise. (d) (1) Joint and several liability under this section extends to: (i) each person who directly or indirectly controls a person liable under this section; (ii) each partner in a partnership liable under this section; (iii) each principal officer or director of a corporation liable under this section; (iv) each other person that has a similar status or performs similar functions as a person liable under this section; and (v) each employee of a person liable under this section, if the employee materially aids in the act or transaction that is a violation under this subtitle. (2) However, liability under this subsection does not extend to a person who did not have knowledge of or reasonable grounds to believe in the existence of the facts by which the liability is alleged to exist. (e) An action under this section must be brought within 3 years after the grant of the franchise.

Md. Code, Business Regulation § 14-228

(a) Except as otherwise provided in this subtitle, a person may not offer to sell, through advertisement or otherwise, or sell a franchise in the State unless the offer of the franchise has been registered under this subtitle. (b) A person who willfully sells a franchise knowingly violating 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.

Md. Code, Business Regulation § 14-229

(a) In connection with an offer to sell or sale of a franchise, a person, directly or indirectly, may not: (1) employ a device, scheme, or artifice to defraud; (2) make an 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; or (3) engage in an act, practice, or course of business that operates or would operate as a fraud or deceit on another person. (b) A person who willfully sells a franchise knowingly violating 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.

Md. Code, Business Regulation § 14-230

(a) In a prospectus or amendment to it, a person may not willfully make a false or misleading statement of a material fact or willfully omit to state a material fact required to be stated in the prospectus or amendment or necessary to make the statements in the prospectus or amendment 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.

Md. Code, Business Regulation § 14-231

(a) A person may not make or cause to be made an untrue statement of a material fact or omit to state a material fact in an application for registration, to amend registration, or for renewal or in a notice or report filed with the Commissioner under this subtitle. (b) A person who willfully sells a franchise knowingly violating 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.

Md. Code, Business Regulation § 14-232

(a) A person may not fail to notify the Commissioner promptly of a material change as required by § 14-220 of this subtitle. (b) A person who willfully sells a franchise knowingly violating 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.

Md. Code, Business Regulation § 14-301

In this subtitle, “multilevel distribution company” means a person who, for consideration, distributes goods or services through independent agents, contractors, or distributors at different levels of distribution with rates of pricing or discounting that differ from 1 level to another.

Md. Code, Business Regulation § 14-302

(a) A multilevel distribution company may not require a participant in its marketing program to buy goods or services or pay any other consideration to participate in the marketing program unless the multilevel distribution company agrees to repurchase the goods: (1) that are in resalable condition; and (2) that the participant has been unable to sell 3 months after receipt of the goods first ordered. (b) A multilevel distribution company shall state in writing in each contract of participation in its marketing program that: (1) a participant may cancel the contract for any reason within 3 months after the date of receipt of goods or services first ordered by written notice to the multilevel distribution company; and (2) on cancellation, the multilevel distribution company shall repurchase the goods. (c) The repurchase price shall be at least 90% of the original price paid by the participant.

Md. Code, Business Regulation § 14-303

A multilevel distribution company may not represent directly or indirectly that participants in its marketing program may or will earn a stated gross or net amount or represent in any way the past earnings of participants unless the stated gross amount, net amount, or past earnings: (1) are those of a substantial number of participants in the community or geographic area where the representation is made; and (2) accurately reflect the average earnings of participants under circumstances similar to those of the participant or prospective participant to whom the representation is made.

Md. Code, Business Regulation § 14-304

(a) The Attorney General or a State’s Attorney may sue to enjoin, wholly or partly, the activities of a multilevel distribution company that violate this subtitle. (b) At least 10 days before seeking injunctive relief, the Attorney General or State’s Attorney shall send written notice of the alleged violation by certified mail to the principal place of business of the multilevel distribution company.

Md. Code, Business Regulation § 14-305

(a) A person who violates this subtitle is guilty of a misdemeanor and, on conviction, is subject to a fine not exceeding $10,000. (b) Each officer and each director of a corporation that violates this subtitle, each partner of a partnership that violates this subtitle, and the owner of a sole proprietorship that violates this subtitle is also subject to the penalty under this section.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://mgaleg.maryland.gov/mgawebsite/Laws/StatutesFetched: 10/16/2026

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