§ 4-72-206 - Unlawful practices of franchisors. - Arkansas Statutes

4-72-206. Unlawful practices of franchisors.

It shall be a violation of this subchapter for any franchisor, through any officer, agent, or employee to engage directly or indirectly in any of the following practices:

(1) To require a franchisee at the time of entering into a franchise arrangement to assent to a release, assignment, novation, waiver, or estoppel which would relieve any person from liability imposed by this subchapter;

(2) To prohibit directly or indirectly the right of free association among franchisees for any lawful purpose;

(3) To require or prohibit any change in management of any franchisee unless the requirement or prohibition of change shall be for reasonable cause, which cause shall be stated in writing by the franchisor;

(4) To restrict the sale of any equity or debenture issue or the transfer of any security of a franchisee or in any way prevent or attempt to prevent the transfer, sale, or issuance of shares of stock or debentures to employees, personnel of the franchisee, or heirs of the principal owner as long as basic financial requirements of the franchisor are complied with, if the sale, transfer, or issuance does not have the effect of accomplishing a sale of the franchise;

(5) To provide any term or condition in any lease or other agreement ancillary or collateral to a franchise, which term or condition directly or indirectly violates this subchapter;

(6) To refuse to deal with a franchise in a commercially reasonable manner and in good faith; or

(7) To collect a percentage of the franchisee's sales as an advertising fee and not use these funds for the purpose of advertising the business conducted by the franchisee.