The director may issue a stop order denying effectiveness to or suspending or revoking the effectiveness of any registration statement if he or she finds that the order is in the public interest and that:

     (1) The registration statement as of its effective date, or as of any earlier date in the case of an order denying effectiveness, is incomplete in any material respect or contains any statement which was in the light of the circumstances under which it was made false or misleading with respect to any material fact;

     (2) Any provision of this chapter or any rule or order or condition lawfully imposed under this chapter has been violated in connection with the offering by:

     (a) The person filing the registration statement but only if such person is directly or indirectly controlled by or acting for the franchisor; or

     (b) The franchisor, any partner, officer, or director of a franchisor, or any person occupying a similar status or performing similar functions or any person directly or indirectly controlling or controlled by the franchisor.

     (3) The franchise offering registered or sought to be registered is the subject of a permanent or temporary injunction of any court of competent jurisdiction entered under any federal or state act applicable to the offering but the director may not:

     (a) Institute a proceeding against an effective registration statement under this clause more than one year from the date of the injunctive relief thereon unless the injunction is thereafter violated; and

     (b) Enter an order under this clause on the basis of an injunction entered under any other state act unless that order or injunction is based on facts that currently constitute a ground for stop order under this section;

     (4) A franchisor's enterprise or method of business includes or would include activities which are illegal where performed;

     (5) The offering has worked or tended to work a fraud upon purchasers or would so operate;

     (6) The applicant has failed to comply with any rule or order of the director issued pursuant to RCW 19.100.050.

     (7) The applicant or registrant has failed to pay the proper registration fee but the director may enter only a denial order under this subsection and he or she shall vacate such order when the deficiency has been corrected.

[2011 c 336 § 559; 1972 ex.s. c 116 § 8; 1971 ex.s. c 252 § 12.]