Section 407.405

Title XXVI TRADE AND COMMERCE

Chapter 407

Effective - 28 Aug 1975   

  407.405.  Pyramid sales schemes prohibited — cancellation of franchise 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, service, 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 franchise agreement without notifying such person of the cancellation, termination or failure to renew in writing at least ninety days in advance of the cancellation, termination or failure to renew, except that when criminal misconduct, fraud, abandonment, bankruptcy or insolvency of the franchisee, or the giving of a no account or insufficient funds check is the basis or grounds for cancellation or termination, the ninety days' notice shall not be required.

­­--------

(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(1986) Ninety-day notice requirement for franchise cancellation held not repealed by implication as applied to motor vehicle franchises by enactment of Motor Vehicle Franchise Practice Act, sections 407.810 to 407.835, RSMo.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.)