2020 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
§ 10-1-415. Contracts to Be in Writing; Delivery of Copy; Required Provisions; Cancellation Rights

Universal Citation: GA Code § 10-1-415 (2020)
  1. Every business opportunity or multilevel distribution contract shall be in writing, and a copy shall be given to the purchaser or participant at the time he or she signs the contract.
  2. Every contract or any material incorporated therein by reference shall include the following:
    1. The terms and conditions of payment, including but not limited to compensation paid to a participant by the company and any payments to be made by the participant to the company within the first six months of the agreement;
    2. A full and detailed description of the acts or services that the seller undertakes to perform for the purchaser or participant, including a specific description of the product or service being marketed;
    3. The seller's principal business address.For purposes of this paragraph, a post office box shall not be considered a principal place of business; and
    4. The approximate delivery date of any products, equipment, supplies, or services that the seller is to deliver to the purchaser or participant.
  3. In addition to the information required in subsection (b) of this Code section, every multilevel distribution contract, or an addendum thereto, shall contain the following:
    1. If training of any type is promised by the seller or company, a complete description of the training and the length of the training;

      "A participant in this multilevel marketing plan has a right to cancel at any time, regardless of reason. Cancellation must be submitted in writing to the company at its principal business address."; and

  4. Cancellation rights pursuant to paragraph (4) of subsection (c) of this Code section must, at a minimum, provide the following:
    1. If the participant has purchased products or paid for administrative services while the contract of participation was in effect, the seller shall repurchase all unencumbered products, sales aids, literature, and promotional items which are in a reasonably resalable or reusable condition and which were acquired by the participant from the seller; such repurchase shall be at a price not less than 90 percent of the original net cost to the participant of the goods being returned.For purposes of this paragraph, "original net cost" means the amount actually paid by the participant for the goods, less any consideration received by the participant for purchase of the goods which is attributable to the specific goods now being returned.Goods shall be deemed "resalable or reusable" if the goods are in an unused, commercially resalable condition at the time the goods are returned to the seller.Goods which are no longer marketed by a company shall be deemed "resalable or reusable" if the goods are in an unused, commercially resalable condition and are returned to the seller within one year from the date the company discontinued marketing the goods; provided, however, that goods which are no longer marketed by a multilevel distribution company shall not be deemed "resalable or reusable" if the goods are sold to participants as nonreturnable, discontinued, or seasonal items and the nonreturnable, discontinued, or seasonal nature of the goods was clearly disclosed to the participant seeking to return the goods prior to the purchase of the goods by the participant. Notwithstanding anything to the contrary contained in this paragraph, a multilevel distribution company may not assert that any more than 15 percent of its total yearly sales per calendar year to participants in dollars are from nonreturnable, discontinued, or seasonal items;
    2. The repayment of all administrative fees or consideration paid for other services shall be at not less than 90 percent of the costs to the participant of such fees or services and shall reflect all other administrative services that have not, at the time of termination, been provided to the participant; and
    3. The participant may be held responsible for all shipping expenses incurred in returning sales aids or products to the company but only if such responsibility of a canceling participant is disclosed in the written description of the cancellation rights.

(2) If a bond is required under Code Section 10-1-412, the following statement, with all blanks properly filled:

"As required by Georgia law, the company has secured a bond or established a trust account for your protection. This bond or trust account can be identified as # ______________ in the name of ______________, provided by the following bonding company or trust company: ______________, which is located at the following address: ________________________ in the City of ______________, State of ______________.";

A participant in a multilevel marketing plan has a right to cancel at any time, regardless of reason.If a participant will be under an obligation to make any payment after the agreement has been entered into, a statement in ten-point boldface type as follows must appear in the contract or an addendum thereto:

A description of any cancellation rights.

(Ga. L. 1980, p. 1233, § 6; Ga. L. 1988, p. 1868, § 1; Ga. L. 1992, p. 2370, § 5.)

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 1992, "#" was deleted following "in the name of" in paragraph (c)(2) and "Goods" was substituted for "Good" in the third sentence of paragraph (d)(1).

Pursuant to Code Section 28-9-5, in 1994, "City" and "State" were substituted for "city" and "state" near the end of paragraph (c)(2).

Law reviews.

- For annual survey on business corporations, see 64 Mercer L. Rev. 61 (2012). For note, "The Georgia Sale of Business Opportunities Act," see 1 Ga. St. U.L. Rev. 219 (1985).

JUDICIAL DECISIONS

Cancellation of multi-level distribution agreement.

- Trial court erred in dismissing a physician's complaint against a health and nutrition multi-level distribution company's officers alleging violations of the Georgia Fair Business Practices Act, O.C.G.A. § 10-1-390 et seq., and the Georgia Sale of Business Opportunities Act (SBOA), O.C.G.A. § 10-1-410 et seq., on the ground that the court lacked personal jurisdiction because in response to requests for admissions, the company admitted that the company was a "multilevel distribution company" as defined in the SBOA, that the provisions of the SBOA, O.C.G.A. § 10-1-415(c)(4), applied to any agreement made in Georgia, that the officers were founding members of the company and were officers when the physician became a marketer; the officers also admitted that the physician's cancellation rights under Georgia law were generally known to the officers. Walker v. Amerireach.com, 306 Ga. App. 658, 703 S.E.2d 100 (2010), aff'd in part, 290 Ga. 261, 719 S.E.2d 489 (2011).

Summary judgment improper.

- Trial court erred in holding that a physician failed to allege that the physician sustained damages due to the failure of a health and nutrition multi-level distribution company to inform the physician of the physician's buy-back rights under the Georgia Sale of Business Opportunities Act (SBOA), O.C.G.A. § 10-1-410 et seq., because the physician presented sufficient evidence of reliance and damages to withstand a motion for summary judgment since the physician alleged that the physician relied on the company to disclose the physician's rights under Georgia law and that the company refused to comply with the product repurchase requirements of the SBOA, O.C.G.A. § 10-1-415(d)(1); the company's contract clause providing that state laws on termination applied if the laws were inconsistent with the contract was insufficient to constitute compliance with O.C.G.A. § 10-1-415(c)(3), and whether the company gave proper "notice" to the physician that the company amended the company's online policies and procedures to comply with Georgia law and whether the physician should have asserted the physician's legal rights earlier were genuine issues of material fact for a jury to decide. Walker v. Amerireach.com, 306 Ga. App. 658, 703 S.E.2d 100 (2010), aff'd in part, 290 Ga. 261, 719 S.E.2d 489 (2011).

Contractual defense of forum selection clause did not apply.

- Trial court erred in granting summary judgment in favor of a health and nutrition multi-level distribution company in a physician's action alleging violations of the Georgia Fair Business Practices Act (FBPA), O.C.G.A. § 10-1-390 et seq., and the Georgia Sale of Business Opportunities Act (SBOA), O.C.G.A. § 10-1-410 et seq., because the physician's claims were not res judicata based on a default judgment entered in favor of the company in a Texas court, and since the four corners of the physician's complaint reveal that the physician's claims were not based on breach of contract but were based on violation of the SBOA, the contractual defense of a forum selection clause did not apply; FBPA claims are not contract claims. Walker v. Amerireach.com, 306 Ga. App. 658, 703 S.E.2d 100 (2010), aff'd in part, 290 Ga. 261, 719 S.E.2d 489 (2011).

Jurisdiction over corporate officers in action alleging violations of the Georgia Sale of Opportunities Act.

- Court of appeals did not err in ruling that a trial court had personal jurisdiction over the officers of a limited liability company (LLC) in a physician's action alleging that the officers violated the Sale of Business Opportunities Act, O.C.G.A. § 10-1-415(d)(1), because the allegations of a physician's complaint were sufficient to withstand the attack on the trial court's jurisdiction over the officers on the ground that the officers acted in the officers' corporate capacities; the "fiduciary shield" doctrine did not apply, and the allegations in the complaint supported a finding that the officers were "primary participants" in the LLC's transaction of business within the state, that the cause of action arose from or was connected with such act or transaction, and that the "minimum contacts" test was therefore met. Amerireach.com, LLC v. Walker, 290 Ga. 261, 719 S.E.2d 489 (2011).

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