§ 691 — Civil remedies

New York § 691

• Jurisdiction: New York
• Law GBS: General Business
• Art. 33: Franchises

Text

§ 691. Civil remedies. 1. A person who offers or sells a franchise in\nviolation of section six hundred eighty-three, six hundred eighty-four\nor six hundred eighty-seven of this article is liable to the person\npurchasing the franchise for damages and, if such violation is willful\nand material, for rescission, with interest at six percent per year from\nthe date of purchase, and reasonable attorney fees and court costs.\n 2. A person may not file or maintain suit under this section if the\nfranchisee or such person received a written offer before suit, and at a\ntime when he owned the franchise, to refund the consideration paid\ntogether with interest at six percent per year from the date of payment,\nless the amount of income earned by the franchisee from the franchise,\nconditioned only upon tender by the person of all items received by him\nfor the consideration and not sold, and failed to accept the offer\nwithin thirty days of its receipt, provided that the offering documents\nare submitted to the department for approval at least ten business days\nprior to submission to the franchisee. The rescission offer shall recite\nthe provisions of this section. If the franchise involves a substantial\nbuilding or substantial equipment or fixtures and a significant period\nof time has elapsed since the sale of the franchise to the franchisee,\nthe department in approving a rescission offer may approve an equitable\noffer recognizing depreciation, amortization, and other factors which\nbear upon the value of the franchise being returned to the franchisor.\nNothing in this subdivision shall prohibit settlement of any dispute\narising under or involving claims based on this chapter, with or without\napproval of the department.\n 3. A person who directly or indirectly controls a person liable under\nthis article, a partner in a firm so liable, a principal executive\nofficer or director of a corporation so liable, a person occupying a\nsimilar status or performing similar functions, and an employee of a\nperson so liable, who materially aids in the act of transaction\nconstituting the violation, is also liable jointly and severally with\nand to the same extent as the controlled person, partnership,\ncorporation or employer. It shall be a defense to any action based upon\nsuch liability that the defendant did not know or could not have known\nby the exercise of due diligence the facts upon which the action is\npredicated.\n 4. An action shall not be maintained to enforce a liability created\nunder this section unless brought before the expiration of three years\nafter the act or transaction constituting the violation.\n 5. Except as explicitly provided in this article, civil liability in\nfavor of any private party shall not arise against a person by\nimplication from or as a result of the violation of a provision of this\narticle or a rule, regulation or order hereunder. Nothing in this\narticle shall limit a liability which may exist by virtue of any other\nstatute or under common law if this article were not in effect.\n