§ 66-95. Required disclosure statement. - North Carolina Statutes

§66‑95.  Required disclosure statement.

At least 48 hours prior to thetime the purchaser signs a business opportunity contract, or at least 48 hoursprior to the receipt of any consideration by the seller, whichever occursfirst, the seller must provide the prospective purchaser a written document,the cover sheet of which is entitled in at least 10‑point bold facecapital letters "DISCLOSURES REQUIRED BY NORTH CAROLINA LAW." Underthis title shall appear the statement in at least 10‑point type that"The State of North Carolina has not reviewed and does not approve,recommend, endorse or sponsor any business opportunity. The informationcontained in this disclosure has not been verified by the State. If you haveany questions about this investment, see an attorney before you sign a contractor agreement." Nothing except the title and required statement shallappear on the cover sheet. The disclosure document shall contain the followinginformation:

(1)        The name of theseller, whether the seller is doing business as an individual, partnership, orcorporation, the names under which the seller has done, is doing or intends todo business, and the name of any parent or affiliated company that will engagein business transactions with purchasers or who takes responsibility forstatements made by the seller.

(2)        The names andaddresses and titles of the seller's officers,  directors, trustees, generalpartners, general managers, principal executives, and any other persons chargedwith responsibility for the seller's business activities relating to the saleof business opportunities. The disclosure document shall additionally contain astatement disclosing who, if any, of the above persons:

a.         Has been the subjectof any legal or administrative proceeding alleging the violation of anybusiness opportunity or franchise law, or fraud, embezzlement, fraudulentconversion, restraint of trade, unfair or deceptive practices, misappropriationof property or comparable allegations;

b.         Has been the subjectof any bankruptcy, reorganization or receivership proceeding, or was an owner,a principal officer or a general partner of any entity which has been subjectto such proceeding.

The disclosure document shall set forth the name ofthe person, the penalties or damages assessed and/or terms of settlement, andnature of and the parties to the action or proceeding, the court or otherforum, the date, the current status of the action or proceeding, the terms andconditions  of any order of decree, the any other information to enable thepurchaser to assess the prior business activities  of the seller.

(3)        The prior businessexperience of the seller relating to business opportunities including:

a.         The name, address,and a description of any business opportunity previously offered by the seller;

b.         The length of timethe seller has offered each such business opportunity;

c.         The length of timethe seller has conducted the business opportunity currently being offered tothe purchaser.

(4)        A full and detaileddescription of the actual services that the business opportunity sellerundertakes to perform for the purchaser.

(5)        A copy of a current(not older than 13 months) financial statement of the seller, updated toreflect any material changes in the seller's financial condition.

(6)        If training of anytype is promised by the seller, the disclosure statement must set forth acomplete description of the training and the length of the training.

(7)        If the sellerpromises services to be performed in connection with the placement of theequipment, product(s) or supplies at various location(s), the disclosurestatement must set forth the full nature of those services as well as thenature of the agreements to be made with the owners or managers of theselocation(s) where the purchaser's equipment, product(s) or supplies will beplaced.

(8)        If the businessopportunity seller is required to secure a bond or establish a trust depositpursuant to G.S. 66‑96, the document shall state either:

a.____ "As required byNorth Carolina law, the seller has secured a bond issued by           

(name and address of surety company)

asurety company authorized to do business in this State. Before signing acontract to purchase this business opportunity, you should check with thesurety company to  determine the bond's current status," or

b.____ "As required byNorth Carolina law, the seller has established a trust account          

(number of account)

______ with _____________________________________________________

(nameand address of bank or savings institution)

Beforesigning a contract to purchase this business opportunity, you should check withthe bank or savings institution to determine the current status of the trustaccount."

(9)        The followingstatement:

"Ifthe seller fails to deliver the product(s), equipment or supplies necessary tobegin substantial operation of the business within 45 days of the delivery datestated in your contract, you may notify the seller in writing and demand thatthe contract be cancelled."

(10)      If the seller makesany statement concerning sales or earnings, or range of sales or earnings thatmay be made through this business opportunity, the document must disclose:

a.         The total number ofpurchasers of business opportunities involving the product(s), equipment,supplies or services being offered who to the seller's knowledge have actuallyreceived earnings in the amount or range specified, within three years prior tothe date of the disclosure statement.

b.         The total number ofpurchasers of business opportunities involving the product(s), equipment,supplies or services being offered within three years prior to the date of thedisclosure statement. (1977, c. 884, s. 1; 1981, c. 817, s. 2.)