At the first in-person communication with a potential purchaser or in the first written response to an inquiry by a potential purchaser, whichever occurs first, wherein the seller assisted marketing plan is described, the seller or his or her representative shall provide the prospective purchaser a written document, the cover sheet of which is entitled in at least 16-point boldface capital letters “DISCLOSURE REQUIRED BY CALIFORNIA LAW.” Under the title shall appear in boldface of at least 10-point type, the statement: “The State of California has not reviewed and does not approve, recommend, endorse or sponsor any seller assisted marketing plan. The information contained in this disclosure has not been checked by the state. If you have any questions about this purchase, see an attorney or other financial adviser before you sign a contract or agreement.” Nothing shall appear on the cover sheet except the title and the statement required above. The disclosure document shall contain the following information:
(a) The name of the seller, the name under which the seller is doing or intends to do business and the name of any parent or affiliated company that will engage in business transactions with purchasers or accept responsibility for statements made by the seller.
(b) A statement of the initial payment to be paid by the purchaser to the seller, or when not known, a statement of the approximate initial payment charged, the amount of the initial payment to be paid to a person inducing, directly or indirectly, a purchaser to contract for the seller assisted marketing plan.
(c) A full and detailed description of the actual services the seller will undertake to perform for the purchaser.
(d) When the seller makes any statement concerning earnings or range of earnings that may be made through the seller assisted marketing plan, he must comply with subdivision (d) of Section 1812.204 and set forth in complete form in this disclosure statement the following:
“No guarantee of earnings or ranges of earnings can be made. The number of purchasers who have earned through this business an amount in excess of the amount of their initial payment is at least ______, which represents ___ percent of the total number of purchasers of this seller assisted marketing plan.”
(e) If training of any type is promised by the seller, a complete description of the training and the length of the training.
(f) If the seller promises services to be performed in connection with the placement of the equipment, product or supplies at a location from which they will be sold or used, the full nature of those services as well as the nature of the agreements to be made with the owner or manager of the location at which the purchaser’s equipment, product or supplies will be placed, must be set forth.
(g) If the seller represents orally or in writing when soliciting or offering for sale or lease or selling or leasing a seller assisted marketing plan that there is a “buy-back” arrangement or that the initial payment is in some manner protected from loss or “secured,” the entire and precise nature of the “buy-back”, “protection” or “security” arrangement shall be completely and clearly disclosed.
(Amended by Stats. 1981, Ch. 258, Sec. 3.)
Last modified: October 25, 2018