APPEAL from the Circuit Court of Cook County; the Hon. ROBERT
J. COLLINS, Judge, presiding.
JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:
Rehearing denied December 23, 1981.
Defendant was sentenced to three years imprisonment after he was tried by jury and convicted of four counts of violating the Franchise Disclosure Act (hereinafter F.D.A.) (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 701 et seq.). Several questions are presented for review, but we find that this appeal must be resolved based upon our consideration of two fundamental issues: (1) whether counts 1, 2 and 4 are void because the statutory provisions upon which they are based delegate legislative authority without providing an intelligible statutory guideline as a limitation on the exercise of the delegated power; and (2) whether the evidence is sufficient to prove defendant guilty of count 3 beyond a reasonable doubt.
We reverse. The following facts are material to our decision.
Defendant was chairman of the board and shareholder in Pie Tree, Inc., a Pennsylvania corporation which was in the business of selling franchises for Pie Tree restaurants and bakeries. In February of 1978, Pie Tree's attorney, Elmer S. Beatty, Jr., sent an application to the Illinois Attorney General's Office to register the corporation under the Franchise Disclosure Act. This application was received on March 2, 1978.
Section 16 of the F.D.A. (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 716) provides that a registration becomes effective 20 business days after receipt of the application, unless, within the 20-day review period, the Attorney General either denies the application outright or notifies "the franchisor or its representative that the materials filed do not meet the requirements of [the] Act."
On March 8, 1978, the Attorney General sent notice that Pie Tree's application was unacceptable and that the 20-day review period would be tolled until Pie Tree submitted additional material. One of the 15 items specified in the "stop letter" was a requirement that Pie Tree submit an agreement which provided for the escrow of monies paid to Pie Tree by franchise purchasers.
The "stop letter" was sent to Beatty at his law office in Pittsburgh, Pennsylvania. The return receipt was signed by a "Diana Roll," "Roth," or "Rath." However, there is no direct evidence that Beatty received the letter or that he discussed with defendant any of the items requested by the Attorney General.
In June of 1978, defendant negotiated the sale of a Pie Tree franchise to Roger Collier for $45,000. This agreement authorized Collier to operate a Pie Tree restaurant in Illinois and obligated Pie Tree to provide Collier with a fully equipped restaurant.
Although Collier paid $43,000 to Pie Tree, the money was not placed in escrow, and before Collier received the promised restaurant, Pie Tree went bankrupt.
Count 1 accused defendant of failing to comply with the requirements of sections 4(1) and 16 of the F.D.A. (Ill. Rev. Stat. 1979, ch. 121 1/2, pars. 704(1), 716) by selling a franchise in Illinois without first having registered as a franchisor. Count 2 accused defendant of failing to comply with the requirements of section 4(2) (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 704(2)) by selling a franchise in Illinois without providing a disclosure statement to the purchaser. And count 4 accused defendant of failing to comply with the requirements of section 16.1 (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 716.1) by selling a franchise in Illinois without first having registered each salesperson who represented the franchisor in this State.
Count 3 accused defendant of "engaging in an act, practice or course of business which acted as a fraud and deceipt [sic] upon Roger Collier, in violation of [F.D.A., § 6(1)(c)] to wit: failing to place the franchise fee paid by Roger Collier in an escrow account as required by the Illinois Attorney General's Office."
Section 20, the crime-defining provision of the F.D.A. (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 720), makes it a Class 4 felony to sell a franchise in Illinois without complying with sections 4, 6, 16 and 16.1 (Ill. Rev. Stat. 1979, ch. 121 1/2, pars. 704, 706, 716, 716.1). Even though section 20 creates a criminal law which is uniformly applicable to franchise sellers, section 12 of the F.D.A. (Ill. Rev. Stat. 1979, ch. 121 1/2, par. 712) authorizes the Attorney General to grant individual exemptions from sections 4 and 16, the underlying provisions upon which counts 1 and 2 of the indictment are based. However, this exemption power does not apply to section 6, and it does not expressly apply to section 16.1.