New York Consolidated Laws, General Business Law - GBS § 691. Civil remedies

1. A person who offers or sells a franchise in violation of section six hundred eighty-three , six hundred eighty-four or six hundred eighty-seven of this article is liable to the person purchasing the franchise for damages and, if such violation as willful and material, for rescission, with interest at six percent per year from the date of purchase, and reasonable attorney fees and court costs.

2. A person may not file or maintain suit under this section if the franchisee or such person received a written offer before suit, and at a time when he owned the franchise, to refund the consideration paid together with interest at six percent per year from the date of payment, less the amount of income earned by the franchisee from the franchise, conditioned only upon tender by the person of all items received by him for the consideration and not sold, and failed to accept the offer within thirty days of its receipt, provided that the offering documents are submitted to the department for approval at least ten business days prior to submission to the franchisee.  The rescission offer shall recite the provisions of this section.  If the franchise involves a substantial building or substantial equipment or fixtures and a significant period of time has elapsed since the sale of the franchise to the franchisee, the department in approving a rescission offer may approve an equitable offer recognizing depreciation, amortization, and other factors which bear upon the value of the franchise being returned to the franchisor.  Nothing in this subdivision shall prohibit settlement of any dispute arising under or involving claims based on this chapter, with or without approval of the department.

3. A person who directly or indirectly controls a person liable under this article, a partner in a firm so liable, a principal executive officer or director of a corporation so liable, a person occupying a similar status or performing similar functions, and an employee of a person so liable, who materially aids in the act of transaction constituting the violation, is also liable jointly and severally with and to the same extent as the controlled person, partnership, corporation or employer.  It shall be a defense to any action based upon such liability that the defendant did not know or could not have known by the exercise of due diligence the facts upon which the action is predicated.

4. An action shall not be maintained to enforce a liability created under this section unless brought before the expiration of three years after the act or transaction constituting the violation.

5. Except as explicitly provided in this article, civil liability in favor of any private party shall not arise against a person by implication from or as a result of the violation of a provision of this article or a rule, regulation or order hereunder.  Nothing in this article shall limit a liability which may exist by virtue of any other statute or under common law if this article were not in effect.


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