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 Disclosure Document or your Earnings Claim Statement.
The Rule lists other clear "dos" and "don'ts." For example:
-
Don't include anything in your Disclosure Document or Earnings Claim Statement other than what the Rule specifically allows.
-
Don't mislead people about what other buyers have earned, what they might earn, or how much help you'll give them. Remember: Under the law, it is illegal to deceive people expressly or by implication. Even if what you say is literally truthful, it still could be deceptive in context. For example, a claim can be misleading if relevant information is left out or if the claim implies something that's not true.
-
Don't tell people they'll have exclusive territories if that's not the case. Be truthful in explaining the likelihood of finding locations, outlets, or customers.
-
If you hold someone out as a successful buyer of your business opportunity, you have to clearly disclose if you've paid them or have some other relationship to them.
-
Don't tell people you're offering them a job if what you're really doing is selling them a business.
The Rule also requires you to keep certain records and make them available to the FTC for three years. Examples of what you need to keep: each buyer's signed disclosure receipt, all executed written contracts, and substantiation supporting your earnings claims. Read the Rule for details on your record keeping obligations. The Rule generally exempts business opportunities that meet the definition of a "franchise," but check the Rule to see if that applies to you.
Stay Ahead of the Curve! Explore our comprehensive CLIClaw Business Opportunity Marketing Compliance Library for in-depth resources and insights.
For more information, see here: https://www.ftc.gov/tips-advice/business-center/guidance/selling-work-home-or-other-business-opportunity-revised-rule
AND
https://www.ftc.gov/legal-library/browse/rules/business-opportunity-rule
These materials were obtained directly from the Federal Government public websites and are posted here for your review and reference only. No Claim to Original U.S. Government Works. This may not be the most recent version. The U.S. Government may have more current information. We make no guarantees or warranties about the accuracy or completeness of this information, or the information linked to. Please check the linked sources directly.