State Statutes


§ 75-24-51. Definitions.

As used in sections 75-24-51 to 75-24-61:

(1) The term "sale or distribution" includes the acts of leasing, renting or consigning;

(2) The term "goods" includes any personal property, real property, or any combination thereof;

(3) The term "other property" includes a franchise, license distributorship or other similar right, privilege, or interest;

(4) The term "person" includes an individual, corporation, trust, estate, partnership, unincorporated association, or any other legal or commercial entity;

(5) The term "pyramid sales scheme" includes any plan or operation for the sale or distribution of goods, services, or other property wherein a person for a consideration acquires the opportunity to receive a pecuniary benefit, which is not primarily contingent on the volume or quantity of goods, services, or other property sold or distributed to be sold or distributed to persons for purposes of resale to consumers, and is based upon the inducement of additional persons, by himself or others, regardless of number, to participate in the same plan or operation;

(6) "Franchise" means a written arrangement for a definite or indefinite period, in which a person for a consideration grants to another person a license to use a trade name, trademark, service mark, or related characteristic, and in which there is a community of interest in the marketing of goods or services at wholesale, retail, by lease, agreement or otherwise; except that, the term "franchise" shall not apply to persons engaged in sales from warehouses or like places of storage, leased departments of retail stores, or places of original manufacture; and

(7) "Consideration" as used in sections 75-24-51 to 75-24-61 does not include payment for sales demonstration equipment and materials furnished at cost for use in making sales and not for resale or payments amounting to less than one hundred dollars ($100.00) when computed on an annual basis.

SOURCES: Laws, 1975, ch. 362, § 1, eff from and after July 1, 1975.


§ 75-24-53. Sales of participation in pyramid sales scheme forbidden; franchises to be terminated only on ninety days' notice.

No person shall, directly or through the use of agents or intermediaries, in connection with the sale, distribution, or lease of goods, services, or other property, sell, offer or attempt to sell a participation or the right to participate in a pyramid sales scheme. No person who has granted a franchise to another person shall cancel or otherwise terminate any such franchise agreement without notifying such person of the cancellation, termination or failure to renew in writing at least ninety (90) days in advance of the cancellation, termination or failure to renew, except that when criminal misconduct, fraud, abandonment, bankruptcy or insolvency of the franchisee, or the giving of a no account or insufficient funds check is the basis or grounds for cancellation or termination, the ninety-day notice shall not be required.

SOURCES: Laws, 1975, ch. 362, § 2, eff from and after July 1, 1975.


§ 75-24-55. Statements by franchisors as to past or potential earnings.

Franchise companies shall not represent directly or by implication that prospective participants may or will earn any stated gross or net amount, or represent in any manner, the past earnings of participants unless in fact the past earnings or predicted gross or net amount represented are those of a substantial number of participants in the community or geographical area in which the representations are made and accurately reflect the average earnings of those participants under circumstances similar to those of the participant or prospective participant to whom the representation is made.


§ 75-24-57. Sales contract for pyramid sales scheme void; actions for damages.

Any sales contract for a pyramid sales scheme made in violation of section 75-24-53 is void and any person who, directly or through the use of agents or intermediaries, induces or causes another person to participate in a pyramid sales scheme will be subject to the remedy and proceedings authorized in section 75-24-15.

A franchisee suffering damage as a result of the failure to give notice as required of the cancellation or termination of a franchise, may institute legal proceedings under the provisions of sections 75-24-51 to 75-24-61 against the franchisor who canceled or terminated his franchise in the county in which the franchisor or his agent resides or can be located or where the franchisee resides. When the franchisee prevails in any such action he may be awarded a recovery of damages sustained to include loss of goodwill, costs of the suit, and any equitable relief that the court deems proper.

SOURCES: Laws, 1975, ch. 362, § 4, eff from and after July 1, 1975.


§ 75-24-59. Injunctive relief.

In addition to other penalties and remedies provided in sections 75-24-51 to 75-24-61, whenever it appears that any person is engaged or is about to engage in any act or practice which constitutes a pyramid sales scheme or which is prohibited by sections 75-24-51 to 75-24-61, the attorney general may bring an action in the name of the state pursuant to the provisions of section 75-24-9 in order to enjoin any such act or practice.

SOURCES: Laws, 1975, ch. 362, § 5, eff from and after July 1, 1975.


§ 75-24-61. Penalties.

Any person willfully violating any of the provisions of section 75-24-53 is guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than five hundred dollars ($500.00) or by imprisonment in the county jail for a term not to exceed six (6) months or by both such fine and imprisonment.

SOURCES: Laws, 1975, ch. 362, § 6, eff from and after July 1, 1975.

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