Michigan Administrative Code
Department - Attorney General
Consumer Protection and Charitable Trusts Division
Franchises
Part 3 - ESCROW
Section R. 445.302 - Escrow requirements
Current through Vol. 24-16, September 15, 2024
Rule 302. When an escrow is imposed in connection with the registration or exemption of a franchise offering, the account shall comply with the following requirements:
(a) Checks shall be made payable to the depository approved by the administrator.
(b) The account shall be established in a bank or trust company acceptable to the administrator, and the funds shall be kept and maintained in an account separate and apart from the franchisor's business and personal accounts.
(c) All proceeds so deposited shall remain the property of the franchisee and shall not be subject to any liens or charges by the escrow agent, or judgments, garnishments, or creditor's claims against the franchisor until released to the franchisor as hereinafter provided. This escrow is for the benefit of each franchisee in the amount paid by each franchisee.
(d) At the administrator's discretion, a statement indicating the status of the escrow shall be furnished by the bank or trust company to the administrator.
(e) A trust or escrow agreement shall be entered into between the bank or trust company, and the franchisor, which shall state that its purpose is to protect the franchisee or subfranchisor and shall authorize the administrator to inspect the records of the bank or trust company, as trustee, relating thereto, and shall state that, upon order of the administrator or a court of competent jurisdiction, the trustee shall release and pay over the funds, or a portion thereof, to the franchisor, subfranchisor, or franchisee, as directed.
(f) The department, by its administrator, shall execute an acknowledgment on the face of each escrow or trust agreement. This acknowledgment indicates approval on the form and content of the agreement, but shall not be construed to make the department a party thereto.
