§ 14-227. Civil liability

   (a) Grounds. --

   (1) A person who sells or grants a franchise is civilly liable to the person who buys or is granted a franchise if the person who sells or grants a franchise offers to sell or sells a franchise:

      (i) without the offer of the franchise being registered under this subtitle; or

      (ii) by means of an untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading, if the person who buys or is granted a franchise does not know of the untruth or omission.

   (2) In determining liability under this subsection, the person who sells or grants a franchise has the burden of proving that the person who sells or grants a franchise did not know and, in the exercise of reasonable care, could not have known of the untruth or omission.

(b) Action to recover damages. -- The person who buys or is granted a franchise may sue under this section to recover damages sustained by the grant of the franchise.

(c) Action by court. -- A court may order the person who sells or grants a franchise to:

   (1) rescind the franchise; and

   (2) make restitution to the person who buys or is granted a franchise.

(d) Joint and several liability. --

   (1) Joint and several liability under this section extends to:

      (i) each person who directly or indirectly controls a person liable under this section;

      (ii) each partner in a partnership liable under this section;

      (iii) each principal officer or director of a corporation liable under this section;

      (iv) each other person that has a similar status or performs similar functions as a person liable under this section; and

      (v) each employee of a person liable under this section, if the employee materially aids in the act or transaction that is a violation under this subtitle.

   (2) However, liability under this subsection does not extend to a person who did not have knowledge of or reasonable grounds to believe in the existence of the facts by which the liability is alleged to exist.

(e) Time limitation. -- An action under this section must be brought within 3 years after the grant of the franchise.

HISTORY: An. Code 1957, art. 56, § 365; 1992, ch. 4, § 2; ch. 26, § 4.