2018 Georgia Code
Title 10 - Commerce and Trade
Chapter 1 - Selling and Other Trade Practices
Article 15 - Deceptive or Unfair Practices
Part 3 - Multilevel Distribution Companies; Sale of Business Opportunities
§ 10-1-410. Definitions
- As used in this part, the term:
(1) "Agreement" means any agreement relating to a business opportunity or multilevel distribution company, including, but not limited to, the contract.
(2) (A) "Business opportunity" means the sale or lease of, or offer to sell or lease, any products, equipment, supplies, or services for the purpose of enabling the purchaser to start a business and in which the seller or company represents:
(i) That the seller or company will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases or other similar devices, or currency operated amusement machines or devices. For purposes of this subparagraph, "assist the purchaser in finding locations" includes but is not limited to supplying the purchaser with names of locator companies, contracting with the purchaser to provide assistance or supply names, or collecting a fee on behalf of or for a locator company;
(ii) That the seller or company will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using, in whole or in part, the supplies, services, or chattels sold to the purchaser; or
(iii) That the company, in conjunction with any agreement which requires a total initial payment of an amount exceeding $500.00, will provide a sales program or marketing program; provided, however, that this subparagraph shall not apply to the sale of a sales program or a marketing program made in conjunction with the licensing of a registered trademark or service mark.
(B) The term "business opportunity" does not include:
(i) The sale of an ongoing business when the owner of that business sells and intends to sell only that one business opportunity;
(ii) Any relationship created solely by or involving:
(I) The relationship between an employer and an employee or among general business partners; or
(II) Membership in a bona fide cooperative association or transactions between bona fide cooperative associations and their members. As used in this subdivision, the term "cooperative association" means either (1) an association of producers of agricultural products organized pursuant to Article 3 of Chapter 10 of Title 2 or statutes similar thereto enacted by other states, or (2) an organization operated on a cooperative basis by and for independent retailers which wholesales goods or furnishes services primarily to its member-retailers;
(iii) Any agribusiness corporation;
(iv) Any insurance agency;
(v) Any offer or sale of a business opportunity where the seller has a net worth on a consolidated basis of not less than $15 million as determined on the basis of the seller's most recent audited financial statement; and where the seller satisfies all of the following conditions or is a wholly owned subsidiary of a company that satisfies all of the following conditions:
(I) Seller is a publicly traded company;
(II) Seller has a class of securities registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 and has timely filed all reports required under Sections 13 and 14 of the Securities Exchange Act of 1934 for a period of 36 months;
(III) Seller has not failed to pay any dividend or defaulted on any loan payment in the last five fiscal years;
(IV) Seller has an annual trading volume of stock of 3,000,000 shares or more; and
(V) Seller has an aggregate market value of the voting stock held by nonaffiliates of $100 million or more; or
(vi) A landlord, property manager, or owner who licenses or leases pushcarts or kiosks within or adjacent to a retail center containing divided retail floor space and common areas which will be used by any such licensee or lessee to sell goods or services not supplied by the landlord, property manager, or owner or any entity affiliated or associated with the landlord, property manager, or owner. For the purposes of this division, the term "pushcart" means a mobile retail unit from which goods or services are sold in the common area of a retail center, and the term "kiosk" means a temporary retail unit from which goods or services are sold in the common area of a retail center.
(3) "Business opportunity seller or company" means any corporation, whether domestic or foreign, or any business, whether a partnership, limited partnership, sole proprietorship, joint venture, association, trust, unincorporated organization, or other entity, which shall solicit, advertise, offer, or contract for any business opportunity or cause to be solicited, advertised, offered, or contracted for any business opportunity in this state, or which has a principal place of business in this state, even if solicitations are of nonresidents of Georgia.
(4) "Company" means any multilevel distribution company or business opportunity company or seller.
(5) "Initial payment" means the total amount which a purchaser or participant is obligated or agrees to pay under the terms of an agreement before or at the time of delivery of the goods or services to the purchaser or participant and which a purchaser or participant is obligated to pay within six months of the date that the purchaser or participant commences operation of the business. If the agreement states a total price and provides that the total price is to be paid partially as an initial cash payment and the remainder in specific monthly payments, the term means the total price. The term does not include any amount required by the seller to be deposited as security for the performance by a purchaser or participant of the operation of the business or that secures an extension of credit. If purchasers or participants may enter a multilevel distribution company or business opportunity at different levels, "initial payment" means the total sum the purchaser or participant is obligated to pay to enter at the level chosen by the purchaser or participant.
(6) "Multilevel distribution company" means any person, firm, corporation, or other business entity which sells, distributes, or supplies for a valuable consideration goods or services through independent agents, contractors, or distributors at different levels wherein such participants may recruit other participants and wherein commissions, cross-commissions, bonuses, refunds, discounts, dividends, or other considerations in the program are or may be paid as a result of the sale of such goods or services or the recruitment, actions, or performances of additional participants. The term shall not include licensed insurance agents, insurance agencies, licensed real estate brokers, licensed real estate agents, licensed real estate agencies, licensed securities dealers, licensed limited securities dealers, licensed securities salesmen, or licensed limited securities salesmen. Any multilevel distribution company which operates in any of the forms precluded by paragraphs (1) through (4) of subsection (a) of Code Section 10-1-411 shall be considered an unlawful pyramid club under Code Section 16-12-38.
(7) "Participant" means anyone who participates at any level in a multilevel distribution company.
(8) "Person" means any individual, corporation, partnership, joint venture, association, trust, unincorporated organization, or other entity and shall include any other person that has a substantive interest in or effectively controls such person as well as the individual officers, directors, general partners, trustees, or other individuals in control of the activities of such person.
(9) "Purchaser" means any person who is solicited to become obligated, or does become obligated, under any agreement.
(10) "Seller" means any multilevel distribution company or it means any person who offers to sell to individuals any business opportunity, either directly or through any agent.