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 finally that the seller is providing, or promising, some type of assistance.
Disclosures to buyers must:
1. Identify the seller. The business opportunity seller must disclose its name, business address and telephone number.
2. Disclose Legal Actions. Civil and criminal actions involving the seller or key personnel within 10 years of the disclosure date, must be disclosed--no more than 100 words each.
3. Cancellation and Refund Policies. If the seller is in fact promising or alluding to such policies in the event that the buyer is unhappy, he or she must include the material terms of the refund or cancellation policies in an attachment to the disclosure document.
4. Earnings Claims. If a seller has an “earnings claim,” the seller must check the “yes” box and attach another document called an earnings claim statement. The rule states that the claim statement must include:
• The name of the person making the claim and the date;
• The specifics of the claim;
• The start and end date those earnings were achieved;
• The number and percentage of people who got those results or better;
• Any information about those people that may differ from the buyer – for example, the part of the country where they live; and
• A statement that the buyer can get written proof of the seller's earning claims if asked for it.
5. References. The name, state and telephone number of the buyers who purchased the business opportunity in the last three years must be disclosed.
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For more information, see here: https://www.ftc.gov/tips-advice/business-center/guidance/selling-work-home-or-other-business-opportunity-revised-rule
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https://www.ftc.gov/legal-library/browse/rules/business-opportunity-rule
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