2017 ORS 650.020¹
Liability of franchise seller
  • defenses
  • amount of recovery
  • attorney fees
  • joint and several liability
  • limitation on action
  • indemnification of corporation
  • right of contribution

(1) Any person who sells a franchise is liable as provided in subsection (3) of this section to the franchisee if the seller:

(a) Employs any device, scheme or artifice to defraud; or

(b) Makes any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

(2) It shall be an affirmative defense to any action for legal or equitable remedies brought under subsection (1) of this section if the franchisee knew of the untruth or omission.

(3) The franchisee may recover any amounts to which the franchisee would be entitled upon an action for a rescission. Except as provided in subsection (4) of this section, the court may award reasonable attorney fees to the prevailing party in an action under this section.

(4) The court may not award attorney fees to a prevailing defendant under the provisions of subsection (3) of this section if the action under this section is maintained as a class action pursuant to ORCP 32.

(5) Every person who directly or indirectly controls a franchisor liable under subsection (1) of this section, every partner, officer or director of the franchisor, every person occupying a similar status or performing similar functions, and every person who participates or materially aids in the sale of a franchise is also liable jointly and severally to the same extent as the franchisor, unless the nonseller did not know, and, in the exercise of reasonable care, could not have known, of the existence of the facts on which the liability is based.

(6) An action may not be commenced under this section more than three years after the sale.

(7) A corporation which is liable under ORS 650.005 (Definitions for ORS 650.005 to 650.100) to 650.100 (Disposition of civil penalties) shall have a right of indemnification against any of its principal executive officers, directors and controlling persons whose willful violation of any provision of ORS 650.005 (Definitions for ORS 650.005 to 650.100) to 650.100 (Disposition of civil penalties) gave rise to the liability. All persons liable under ORS 650.005 (Definitions for ORS 650.005 to 650.100) to 650.100 (Disposition of civil penalties) shall have a right of contribution against all other persons similarly liable, based upon each person’s proportionate share of the total liability, except:

(a) A person willfully misrepresenting or failing to disclose shall not have any right of contribution against any other person guilty merely of a negligent violation; and

(b) A principal executive officer, director, or controlling person shall not have any right of contribution against the corporation to which the person sustains that relationship. [1973 c.509 §4; 1979 c.284 §185; 1995 c.696 §40]

Notes of Decisions

Although damages are limited to amount that would be recoverable under ac­tion for rescission, damages are ac­tion at law triable to jury. Goodyear Tire & Rubber Co. v. Tualatin Tire & Auto, 322 Or 406, 908 P2d 300 (1995), modified 325 Or 46, 932 P2d 1141 (1997)

Limita­tion period for bringing ac­tion under this sec­tion does not incorporate discovery rule. Towne v. Robbins, 331 F. Supp. 2d 1269 (D. Or. 2004)

1 Legislative Counsel Committee, CHAPTER 650—Franchise Transactions, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors650.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 650, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano650.­html (2017) (last ac­cessed Mar. 30, 2018).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.