Pyramid sales schemes prohibited
This law does two things. First, it says no one is allowed to sell or promote a pyramid sales scheme — a setup where people mainly make money by recruiting others to join, not by selling real products. Second, if someone owns a franchise (like a business license from a bigger company), the company that gave them the franchise has to give at least 90 days written notice before canceling or ending the deal. The only exceptions are serious situations like crime, fraud, the franchisee going broke, or writing a bad check — in those cases, no advance notice is required.
407.405. s prohibited — of without notice prohibited, exceptions. — No person shall, directly or through the use of agents or intermediaries, in connection with the sale or distribution of goods, , or other property, sell, offer or attempt to sell a participation or the right to participate in a pyramid sales scheme. No person who has granted a franchise to another person shall cancel or otherwise terminate any such without notifying such person of the cancellation, or failure to renew in writing at least ninety days in advance of the cancellation, termination or failure to renew, except that when criminal , , abandonment, bankruptcy or of the , or the giving of a no account or is the basis or grounds for cancellation or termination, the ninety days' notice shall not be required.
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Source & history notes
(L. 1974 H.B. 1132 § 2, A.L. 1975 H.B. 810 § 2) (1980) Solicitation of individuals to join pyramid structured club, the purpose of which was to generate money payable to members higher up on the pyramidal scale, violated statute prohibiting pyramid sales schemes. State ex rel. Ashcroft v. Wahl (A.), 600 S.W.2d 175. (1980) General intent of the legislature in the enactment of statutes prohibiting pyramid sales schemes is to buttress a strong public policy against pyramid sales schemes involving cover or disguise of some seemingly legitimate commercial transaction. State ex rel. Ashcroft v. Wahl (A.), 600 S.W.2d 175. (1986) Ninety-day notice requirement for franchise cancellation held not repealed by implication as applied to motor vehicle franchises by enactment of Motor Vehicle Franchise Practice Act, sections 407.810 to 407.835, RSMo. Maude v. General Motors Corp., 626 F.Supp. 1081 (W.D. Mo.)
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