§482E-8  Duties of the director.  (a) 
The director may issue a stop order prohibiting the sale of a franchise if the
director finds that the order is in the public interest and that:



(1)  The offering circular is incomplete in any
material respect or contains any statement which in the light of the
circumstances under which it is or may be made false or misleading with respect
to any material fact.



(2)  Any provision of this chapter or any rule or
order or condition lawfully imposed under this chapter has been violated in
connection with the sale of a franchise by the franchisor, any partner, officer
or director of a franchisor, or any person occupying a similar status or
performing similar functions or any person directly or indirectly controlling
or controlled by the franchisor.



(3)  The offer or sale of the franchise is the subject
of a permanent or temporary injunction of any court of competent jurisdiction
or an administrative order prohibiting offer or sale of the franchise entered
under any federal or state act applicable to the franchise but the director may
not enter an order under this subparagraph on the basis of an injunction
entered under any other law unless that order or injunction is based on facts
that currently constitute a ground for a stop order under this section.



(4)  A franchisor's enterprise or method of business
includes or would include activities which are illegal where performed.



(5)  The offer or sale of the franchise has worked or
tended to work a fraud upon purchasers or would so operate.



(6)  The franchisor or subfranchisor has failed to
demonstrate that adequate financial arrangements have been made to fulfill
obligations to provide real estate improvements, equipment, training, or other
items included in the offering; and the franchisor or subfranchisor is unable
or unwilling to comply with an order of the director under subsection (e) of
this section to escrow or impound franchise fees and other funds paid by the
franchisee or subfranchisor, or to furnish a surety bond approved by the
director.



(b)  Upon the entry of a stop order under any
part of subsection (a), the director shall promptly notify the franchisor or
subfranchisor that the order has been entered and the reasons therefor and that
within fifteen days after receipt of a written request, the matter will be set
down for hearing.  If no hearing is requested within fifteen days and none is
ordered by the director, the director shall enter the director's written
findings of fact and conclusions of law and the order will remain in effect
until it is modified or vacated by the director.  If a hearing is requested or
ordered, the director after notice of an opportunity for hearings to the
franchisor or subfranchisor shall enter the director's written findings of fact
and conclusions of law and may modify or vacate the order.  The director may
modify or vacate a stop order if the director finds that the conditions which
prompted the director's entry have changed or that it is otherwise in the
public interest to do so.



(c)  The director shall refer such evidence as
may be available concerning violations of this chapter or any rule or order
hereunder to the attorney general or the proper prosecuting attorney who may in
the attorney general's or prosecuting attorney's discretion with or without
such a reference institute the appropriate criminal proceeding under this
chapter.



(d)  The director may, in accordance with
chapter 91, from time to time make, amend, and rescind such rules, forms, and
orders as are necessary to carry out this chapter including rules and forms
governing offering circulars and reports and defining any terms whether or not
used in this chapter insofar as the definitions are consistent with this
chapter.



(e)  If the director finds that the applicant
has failed to demonstrate that adequate financial arrangements have been made
to fulfill obligations to provide real estate, improvements, equipment,
inventory, training, or other items included in the franchise proposed to be
sold, the director may require the escrow or impoundment of franchise fees and
other funds paid by the franchisee or subfranchisor, until the obligations are
fulfilled, or the furnishing of a surety bond approved by the director, if the
director finds that the requirement is necessary and appropriate to protect
prospective franchisees or subfranchisors. [L 1974, c 18, pt of §1; am L 1978,
c 242, §9; gen ch 1985]