FIRSTREGULARSESSION
HOUSEBILLNO.1138
103RDGENERALASSEMBLY
INTRODUCEDBYREPRESENTATIVEREUTER.
2436H.01I JOSEPHENGLER,ChiefClerk
ANACT
Torepealsections407.400and407.405,RSMo,andtoenactinlieuthereoftwonewsections
relatingtopyramidsalesschemes.
BeitenactedbytheGeneralAssemblyofthestateofMissouri,asfollows:
SectionA.Sections407.400and407.405,RSMo,arerepealedandtwonewsections
2enactedinlieuthereof,tobeknownassections407.400and407.405,toreadasfollows:
407.400.Asusedinsections407.400to407.420, thefollowingtermsmean:
2 (1)"Bonafideinventoryrepurchaseprogram",aprogrambywhichanentity
3repurchasesfromasalespersoncurrentandmarketableinventoryinpossessionofthe
4salesperson,onrequestandoncommerciallyreasonableterms,whenthesalesperson's
5businessrelationshipisterminated;
6 (2)"Commerciallyreasonableterms",therepurchaseofcurrentand
7marketableinventorywithintwelvemonthsafterthedateofpurchaseatnotless
8thanninetypercentoftheoriginalnetcost,lessappropriateset-offsandlegalclaims,if
9any;
10 (3)"Compensation",apaymentofanymoney,athingofvalue,orfinancial
11benefitconferredinreturnforinducinganotherpersontoparticipateinapyramidsales
12scheme;
13 (4)"Consideration",thepaymentofcashorthepurchaseofgoods,services,or
14intangibleproperty.Thetermshallnotincludethepurchaseofgoodsandservices
15furnishedatcosttobeusedinmakingsalesandnotforresale,ortimeandeffortspent
16inpursuitofsalesorrecruitingactivities.Thetermshallnotincludepaymentforsales
EXPLANATION—Matterenclosedinbold-facedbrackets[thus] intheabovebillisnotenactedandis
intendedtobeomittedfromthelaw.Matterinbold-facetypeintheabovebillisproposedlanguage. 17demonstrations,equipment,andmaterialsfurnishedatcostforuseinmakingsalesand
18notforresale;
19 (5)"Currentandmarketable",excludesinventorythat:
20 (a)Isnolongerwithinitscommerciallyreasonableuseorshelf-lifeperiod;
21 (b)Wasclearlydescribedtosalespersonspriortopurchaseasseasonable,
22discontinued,orspecialpromotionproductsnotsubjecttotheplanororganization's
23inventoryrepurposeprogram;or
24 (c)Hasbeenusedoropened;
25 (6)"Franchise"[means], awrittenororalarrangementforadefiniteorindefinite
26period,inwhichapersongrantstoanotherpersonalicensetouseatradename,trademark,
27servicemark,orrelatedcharacteristic,andinwhichthereisacommunityofinterestinthe
28marketingofgoodsorservicesatwholesale,retail,bylease,agreement,orotherwise,
29includingbutnotlimitedtoacommercialrelationshipofdefinitedurationorcontinuing
30indefiniteduration,betweena"wholesaler",suchwholesalerbeingapersonasdefinedinthis
31section,licensedpursuanttotheprovisionsofchapter311tosellatwholesale,intoxicating
32liquor,asdefinedinsection311.020,toretailers,dulylicensedinthisstate,anda"supplier",
33beingapersonengagedinthebusinessasamanufacturer,distiller,rectifierorout-of-state
34solicitorwhosebrandsofintoxicatingliquoraredistributedthroughdulylicensedwholesalers
35inthisstate,andwhereinawholesalerisgrantedtherighttooffer,sell,anddistributewithin
36thisstateoranydesignatedareathereofsuchofthesupplier'sbrandsofintoxicatingliquor,or
37allofthem,asmaybespecified;exceptthat,theterm"franchise"shallnotapplytopersons
38engagedinsalesfromwarehousesorlikeplacesofstorage,otherthanwholesalersasabove
39described,leaseddepartmentsofretailstores,placesoforiginalmanufacture,norshallthe
40term"franchise"applytoacommercialrelationshipthatdoesnotcontemplatethe
41establishmentormaintenanceofaplaceofbusinesswithinthestateofMissouri.Asused
42herein"placeofbusiness"meansafixed,geographicallocationatwhichgoods,productsor
43servicesaredisplayedordemonstratedforsale;
44 [(2)Theterm] (7)"Goods", includesanypersonalproperty,realproperty,orany
45combinationthereof;
46 [(3)Theterm"otherproperty"includesafranchise,licensedistributorship,orother
47similarright,privilege,orinterest;
48 (4)Theterm]
49 (8)"Inventory",includesbothgoodsandservices,includingcompany-produced
50promotionalmaterials,salesaids,andsaleskitsthatanentityrequiresindependent
51salespersonstopurchase;
52 (9)"Inventoryloading",therequirementorencouragementbyaplanor
53operationtohavetheindependentsalespersonoftheplanoroperationpurchase
HB1138 2 54inventoryinanamountthatexceedstheamountthatthesalespersoncanexpecttoresell
55forultimateconsumptionortouseorconsumeinareasonabletimeperiod,orboth;
56 (10)"Person"includesanindividual,corporation,trust,estate,partnership,
57unincorporatedassociation,oranyotherlegalorcommercialentity;
58 (11)"Promote",tocontrive,prepare,establish,plan,operate,advertise,or
59otherwiseinduceorattempttoinduceanotherpersontoparticipateinapyramidsales
60scheme;
61 [(5)Theterm](12)"Pyramidsalesscheme"[includes], anyplanoroperation[forthe
62saleordistributionofgoods,servicesorotherpropertywhereinapersonforaconsideration
63acquirestheopportunitytoreceiveapecuniarybenefit,whichisnotprimarilycontingenton
64thevolumeorquantityofgoods,services,orotherpropertysoldordistributedortobesoldor
65distributedtopersonsforpurposesofresaletoconsumers,andisbasedupontheinducement
66ofadditionalpersons,byhimselforherselforothers,regardlessofnumber,toparticipatein
67thesameplanoroperation;and
68 (6)Theterm"saleordistribution"includestheactsofleasing,rentingorconsigning]
69bywhichapersongivesconsiderationfortheopportunitytoreceivecompensationthat
70isderivedprimarilyfromtheintroductionofotherpersonsintotheplanoroperation
71ratherthanfromthesaleandconsumptionofgoods,services,orintangiblepropertyby
72aparticipantorotherpersonsintroducedintotheplanoroperation.Thetermincludes
73anyplanoroperationunderwhichthenumberofpeoplewhomayparticipateislimited
74eitherexpresslyorbytheapplicationofconditionsaffectingtheeligibilityofapersonto
75receivecompensationundertheplanoroperationandincludesanyplanoroperation
76underwhichaperson,ongivinganyconsideration,obtainsanygoods,services,or
77intangiblepropertyinadditiontotherighttoreceivecompensation.
407.405.1.Nopersonshall,directlyorthroughtheuseofagentsorintermediaries,
2inconnectionwiththesaleordistributionofgoods,service,orotherproperty,sell,offeror
3attempttosellaparticipationortherighttoparticipateinapyramidsalesscheme.Noperson
4whohasgrantedafranchisetoanotherpersonshallcancelorotherwiseterminateanysuch
5franchiseagreementwithoutnotifyingsuchpersonofthecancellation,terminationorfailure
6torenewinwritingatleastninetydaysinadvanceofthecancellation,terminationorfailure
7torenew,exceptthatwhencriminalmisconduct,fraud,abandonment,bankruptcyor
8insolvencyofthefranchisee,orthegivingofanoaccountorinsufficientfundscheckisthe
9basisorgroundsforcancellationortermination,theninetydays'noticeshallnotberequired.
10 2.(1)Theprovisionsofthissectionshallnotbeconstruedtoprohibitaplanor
11operation,ortodefineaplanoroperationasapyramidsalesscheme,iftheparticipants
12intheplanoroperationgiveconsiderationinreturnfortherighttoreceive
13compensationbaseduponpurchasesofgoods,services,orintangiblepropertyfor
HB1138 3 14personaluse,consumption,orresaleiftheplanoroperationdoesnotcauseinventory
15loadingandtheplanoroperationimplementsabonafideinventoryrepurchase
16program.
17 (2)Apersonshallclearlydescribeabonafideinventoryrepurchasingprogram
18inanyrecruitingliterature,salesmanual,andcontractswithindependentsalespersons.
19Therecruitingliterature,salesmanual,orcontractshalldiscloseanyinventorythatis
20noteligibleforrepurchaseundertheprogram.
21 (3)Abonafideinventoryrepurchaseprogramisnotrequiredtoapplyto
22inventorythatisnolongerwithintheinventory'scommerciallyreasonableuseorshelf-
23lifeperiodorhasbeenusedoropened.
24 3.Beforeasalespersonoftheentitypurchasesanynewinventory,theentityshall
25clearlydescribetheinventorythatisexcludedfromthebonafideinventoryrepurchase
26programasseasonal,discontinued,orspecialpromotionproductsandtheinventory
27thatisnotsubjecttotheentity'sbonafideinventoryrepurchaseprogram.
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