729.10 Vending facility income and financial requirements.

    (a) All income generated or derived from the operation of a vending facility, except as otherwise proscribed by law, is the property of the licensee managing the vending facility, except as provided under section 729.9 of this Part and subdivision (e) of this section.

    (b) A licensee may charge to the vending facility only those operating expenses and in only such amounts as are determined by the commission to be reasonable and necessary for the proper operation of the vending facility and for the purposes of determining set-aside charges.

    (c) Each licensee must establish and maintain a checking account for receipts and expenses related to the operation of the vending facility. This account must be used exclusively for the financial activities of the facility and a licensee may not commingle personal or other funds in this account except to the extent that such funds represent the licensee's equity in the vending facility. The licensee must be the sole owner of this checking account.

    (d) If a licensee maintains cash reserves for vacation, sick leave or any other benefits provided to employees and the licensee retires, resigns, dies, or is otherwise relieved from the operation of the vending facility, the licensee, or the licensee's estate or legal representative, will be responsible for the payment to the employees of any such accumulated benefit credits as may have been earned by such employees, up to the date of such retirement, resignation, relief or death of the licensee.

    (e) At its option, the commission will:

        (1) provide funding for liability insurance coverage for all licensees; or

        (2) require each licensee to pay a prorated portion of a group liability insurance plan administered by the commission. Licensees must report to the commission, in the manner and time required by the insurance company or the commission, all accidents occurring on the premises and related insurance or legal claims brought against them.

    (f) Licensees whose vending facilities are equipped with cash registers must:

        (1) record all cash transactions on cash register tape;

        (2) use the proper cash register functions and/or classifications;

        (3) prepare and retain a final daily closeout tape;

        (4) total and clear the register daily; and

        (5) promptly report cash register malfunctions to the commission.

    (g) The commission may impose penalties on licensees who violate the rules set forth in subdivision (f) of this section. Such penalties are:

        (1) for a first violation, a letter of reprimand will be given to the licensee and it will be made a permanent part of the licensee's record with the commission;

        (2) for a second violation within one year, a second letter of reprimand will be given to the licensee and made a permanent part of the licensee's record. The licensee also will be placed on probation for 12 months from the date of the letter of reprimand and the operating agreement may be terminated; and

        (3) for a third violation within one year, the commission may terminate the operating agreement and revoke the licensee's license. The licensee may request a full evidentiary hearing held pursuant to section 729.22 of this Part to challenge such termination and/or revocation.

    (h) Each licensee must submit, on forms provided or approved by the commission, monthly financial reports in accordance with policies and procedures established by the commission. Such reports must be complete, accurate, and signed by the licensee. Each licensee must conduct and record a physical merchandise inventory during the month of December. Such inventory must be complete, accurate, signed by the licensee, and submitted to the commission. In the event of the transfer, resignation, retirement, death, or other removal of a licensee from the Business Enterprise Program, an inventory will be conducted by or at the request of the commission.

    (i) A licensee who fails to submit required financial reports, set-aside of funds levy, scheduled loan payments or any other monies which may be due the commission in accordance with the commission's policies and procedures will be considered delinquent.

        (1) The first delinquency within a 12-month period will result in a letter to the licensee warning of the penalties to be imposed for subsequent delinquencies within 12 months. Multiple delinquencies occurring within the same calendar month will be considered a single delinquency.

        (2) A second delinquency within 12 months of the first delinquency will result in the licensee being placed on probation for 12 months beginning on the date of the second delinquency.

        (3) A third delinquency within 12 months of the first delinquency will be grounds for license revocation. The licensee may request that a full evidentiary hearing be held pursuant to section 729.22 of this Part to challenge such revocation.

        (4) If any delinquency remains unresolved for two or more calendar months, it will be considered a second or subsequent delinquency, and subject to the provisions set forth above.

    (j) Licensees must maintain all financial records and documents for a period of six years. Such records and documents will be made available to the commission or its designee upon request. Such financial records must include, but are not limited to: a cash receipts and disbursements book or ledger, a payroll book for vending facilities with employees, receipts for disbursements, daily cash reports, bank statements, canceled checks and cash register receipt tapes (both daily tapes and detail tapes).

    (k) The commission, or an agent designated by the commission, may conduct a financial audit of a vending facility. A licensee, upon written request by the commission, must provide to the commission or the commission's designee all financial records and documents requested by the commission or the commission's designee.

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