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Spring Fresh Corp. v. Dept. of Securities3/24/1992
The opinion of the court was delivered by: GARRETT, Presiding Judge.
Spring Fresh Corporation, Sherman Surface and Charlie Thompson (Appellants) seek review of the order, dated September 20, 1990, of the Oklahoma Securities Commission (the Commission) which affirmed the permanent cease and desist order issued against them by the Administrator of the Oklahoma Department of Securities (Appellee). The Administrator's order, issued June 12, 1990, required Appellants to "cease and desist from offering and/or selling business opportunities in the State of Oklahoma in violation of [71 O.S.Supp. 1985] Section 806 of the Oklahoma Business Opportunity Sales Act."
The Oklahoma Business Opportunity Sales Act (the Act) is found at 71 O.S.Supp. 1985 §§ 801 et seq. The Act makes it unlawful to "offer or sell any business opportunity" unless it is registered, as required by 71 O.S.Supp. 1985 § 807 , or is exempt under 71 O.S.Supp. 1985 § 803 . "Business opportunity" is defined under § 802(3)(a):
3. a. `Business opportunity' means a contract or agreement, between a seller and purchaser, express or implied, orally or in writing, wherein it is agreed that the seller or a person recommended by the seller shall provide to the purchaser any products, equipment, supplies or services enabling the purchaser to start a business and the seller represents directly or indirectly, orally or in writing, that:
(1) The seller or a person recommended by the seller will provide or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases or other similar devices, on premises neither owned nor leased by the purchaser or seller; or
(2) The seller or a person recommended by the seller will provide or assist the purchaser in finding outlets or accounts for the purchaser's products or services; or
(3) The seller or a person specified by the seller will purchase any or all products made, produced, fabricated, grown, bred or modified by the purchaser; or
(4) The seller guarantees that the purchaser will derive income from the business which exceeds the price paid to the seller; or
(5) The seller will refund all or part of the price paid to the seller, or repurchase any of the products, equipment or supplies provided by the seller or a person recommended by the seller, if the purchaser is dissatisfied with the business; or
(6) The seller will provide a marketing plan.
Appellee's witness, W. Charles Kaiser (Kaiser), testified he was employed as an investigator for Appellee. He contacted Appellant corporation, pretending to be interested in an investment in the company, which provided, for a fee, products and equipment for the purpose of manufacturing soap products. He went to the plant and met the individual appellants, Thompson and Surface. He discussed the investment with Thompson, who explained that his cost would be $9850, for which he would receive a 55 gallon barrel, a wooden stand to put the barrel on, a vat mixer, plastic bottles and bottle caps, the necessary chemicals and 44 hours of training and instruction. These items were referred to as the "Assets of Purchase" on an incomplete form contract, which was shown to him. Thompson told Kaiser he would be expected to produce 100 cases of the product per week and that he could expect to be paid between $1200 and $2800 per month. Thompson said the company would send a truck to his house once a week to pick up the finished product and that Spring Fresh would be contractually obligated to purchase the product at a predetermined price for the length of the contract,
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