Questions & Answers

Kinds of Claims that Could Result in Civil Penalties for Companies that sell Franchises, Business Opportunities, and Investments:

Kinds of Claims that Could Result in Civil Penalties for Companies that sell Franchises, Business Opportunities, and Investments: On October 26, 2021, the Federal Trade Commission (“FTC”) issued a new Notice of Penalty Offenses targeting deceptive money-making claims. This notice warns over 1,100...

What are Business Opportunities?

Business Opportunities The Franchise and Business Opportunity Rule requires franchise and business opportunity sellers to give consumers a detailed disclosure document at least 10 days before the consumer pays any money or legally commits to a purchase. The document must include: the names,...

What are the 3 Key Legal Responsibilities in the Business Opportunity Rule?

What's required. If a transaction falls within the Rule, a seller has three key legal responsibilities: You have to give the buyer a one-page Disclosure Document. And you have to provide this document seven days before the prospective buyer signs a contract or pays any money for the business...

What are the 5 Key Pieces of Information Required in the Disclosure Document in the Business Opportunity Rule?

At least seven days before prospective buyers sign a contract or pay any money for a business opportunity, you have to give them a one-page Disclosure Document that lists five key pieces of information. To keep things simple for you and the buyer, you must use the standard form. It's available at...

What are the Disclosure requirements and prohibitions concerning Business Opportunities?

DISCLOSURE REQUIREMENTS AND PROHIBITIONS CONCERNING BUSINESS OPPORTUNITIES Authority: 15 U.S.C. 41-58. Source: 72 FR 15563, Mar. 30, 2007, unless otherwise note. § 437.1 The Rule. In connection with the advertising, offering, licensing, contracting, sale, or other promotion in or affecting commerce...

What are the Earnings Claims in the Business Opportunity Rule?

§437.4 Earnings claims. In connection with the offer for sale, sale, or promotion of a business opportunity, it is a violation of this Rule and an unfair or deceptive act or practice in violation of Section 5 of the FTC Act, for the seller to: (a) Make any earnings claim to a prospective purchaser...

What are the other Prohibited Practices in the Business Opportunity Rule?

§437.6 Other prohibited practices. In connection with the offer for sale, sale, or promotion of a business opportunity, it is a violation of this part and an unfair or deceptive act or practice in violation of Section 5 of the FTC Act for any seller, directly or indirectly through a third party, to...

What are the Record Retention Requirements in the Business Opportunity Rule?

§437.7 Record retention. To prevent the unfair and deceptive acts or practices specified in this Rule, business opportunity sellers and their principals must prepare, retain, and make available for inspection by Commission officials copies of the following documents for a period of three years: (a...

What are the Revised Rules for the Business Opportunity Rule?

Effective March 2012, the Business Opportunity Rule was revised to include disclosures that business opportunity sellers must provide to prospective buyers. The Rule defines “business opportunities” by determining that the buyer is entering into a new business, required to make a payment and...

What illegal practices must you avoid in the Business Opportunity Rule?

The Rule puts down in black and white what's always been the case: It's illegal to engage in deceptive or unfair practices in the promotion, marketing, or sale of any business opportunity. For example, don't say anything orally or in other paperwork that contradicts information in your one-page...

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