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Jan 25 -- Comment period extended until January 31, 2023. https://www.federalregister.gov/d/2023-01433

1) Nov 25 -- The Federal Trade Commission (“FTC” or “Commission”) is requesting public comment on its “Business Opportunity Rule” (“Rule”), the trade regulation rule governing the sale of certain business opportunities. The Commission is soliciting comments about the efficiency, costs, benefits, and regulatory impact of the Rule, as part of its ten-year regulatory review plan. The Commission is also soliciting comments to inform its consideration of whether the Rule should be extended to include business opportunities and other money-making opportunity programs not currently covered by the Rule, including business coaching and work-from-home programs, investment coaching programs, and e-commerce opportunities. All interested persons are hereby given notice of the opportunity to submit written data, views, and arguments concerning the Rule. Written comments must be received on or before January 24, 2023.

The Commission issued the Business Opportunity Rule pursuant to its authority under Sections 5 and 18 of the Federal Trade Commission Act to proscribe unfair or deceptive acts or practices. The Business Opportunity Rule requires business opportunity sellers to furnish prospective purchasers a disclosure document that provides information regarding the seller, the seller's business, and the nature of the proposed business opportunity, as well as additional information to substantiate any claims about actual or potential sales, income, or profits for a prospective business opportunity purchaser. The seller must also preserve information that forms a reasonable basis for such claims.

The Rule is designed to ensure that prospective purchasers receive information to help them evaluate business opportunities. Sellers must disclose five key items of information in a simple, one-page document: (1) the seller's identifying information; (2) whether the seller makes a claim about the purchaser's likely earnings (and, if yes, the seller must provide information supporting any such claims); (3) whether the seller, its affiliates, or key personnel have been involved in certain legal actions (and, if yes, the seller must provide a separate list of those actions); (4) whether the seller has a cancellation or refund policy (and, if yes, the seller must provide a separate document stating the material terms of such policies); and (5) a list of persons who have purchased the business opportunity within the previous three years. Misrepresentations and omissions are prohibited under the Rule, and, for sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

Under the Rule, a “business opportunity” means a “commercial arrangement” in which a “seller solicits a prospective purchaser to enter into a new business”; the “prospective purchaser makes a required payment”; and the “seller, expressly or by implication, orally or in writing, represents that the seller or one or more designated persons will” either (1) provide locations for the purchaser's equipment, such as a vending machine; (2) provide outlets, accounts, or customers for the purchaser's goods or services; or (3) buy back any or all of the goods or services that the purchaser makes or provides.

The Business Opportunity Rule arose out of the Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures Rule (“Original Rule”), which addressed deceptive and unfair practices in the sale of franchises and business opportunity ventures. In March 2007, the FTC bifurcated the Original Rule into a Franchise Rule and Interim Business Opportunity Rule in order to require different kinds of pre-sale disclosures and related regulatory provisions. The Interim Business Opportunity Rule was similar in substance to the Original Rule. On March 1, 2012, the Commission's Revised Business Opportunity Rule took effect and, among other things, expanded the types of covered business opportunities and simplified and streamlined the disclosures provided to prospective business opportunity purchasers.

Since the Rule took effect, the Commission has continued to vigorously challenge misleading earnings claims. For example, the FTC has brought cases under section 5 of the FTC Act, 15 U.S.C. 45, against business coaching and work-from-home programs, investment coaching programs, and e-commerce opportunities. Despite the aggressive enforcement program at the Commission, deceptive earnings claims continue to proliferate in the marketplace, and many of them are not covered by the Rule. Among other things, this advance notice of proposed rulemaking (ANPR) solicits input on whether the Rule should be expanded.

FRN: https://www.federalregister.gov/d/2022-25587
 
2) Nov 17 -- FTC Explores Changes, Possible Expansion of Its Business Opportunity Rule [news release]
Agency seeks public comment on how to improve the rule and further steps to address the scourge of bogus money-making schemes

The Federal Trade Commission is exploring changes to the Business Opportunity Rule, seeking comment from the public on the rule’s effectiveness and a potential expansion to the rule to cover other types of money-making opportunities, such as coaching or mentoring programs, e-commerce opportunities, or investment opportunities.

“The Commission is prepared to use every tool to ensure that companies can’t prey on consumers with false money-making opportunities,” said Samuel Levine, Director of the Bureau of Consumer Protection. “One key tool is our Business Opportunity Rule, and we want to hear from the public on how we can improve it.”

The FTC is inviting the public to comment not only on the potential expansion of the rule, but also on the effectiveness of the existing rule, including whether it should be retained or eliminated, as well as other changes that should be made to the rule.

The FTC’s Business Opportunity Rule was first adopted in 2012, making it easier for people to get the information they need when they are thinking about investing in a business opportunity.

The Business Opportunity Rule prohibits those selling a business opportunity from making deceptive statements, and it requires them to make a number of key disclosures to potential buyers, including:

The seller’s identifying information.
Whether the seller is making claims about possible earnings or profits, and if so, information that backs up those claims.
Whether the seller, its affiliates, or key personnel have been involved in certain legal actions, and if so, information on those actions.
Whether the seller has a cancellation or refund policy, and if so, the terms of that policy.
A list of people who have purchased the business opportunity in the last three years.
For sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

In a Federal Register notice, the FTC is seeking comment from the public on a number of questions related to the rule, including the need for the rule, its benefits and costs to consumers and to industry, the level of compliance with the rule, and any changes that should be made to the rule, including any practices or types of business opportunities that should be covered by the rule. The notice also seeks comment on whether the rule be expanded to more broadly to include coaching or mentoring programs, e-commerce opportunities, investment opportunities, or other types of business or money-making opportunities.

In addition, the notice asks the public to comment on whether business opportunity practices disproportionately affect low-income communities, communities or color, and other historically underserved communities, and suggested amendments to the rule to address any negative effects.

News release: https://www.ftc.gov/news-events/news/press-releases/2022/11/ftc-explores-changes-possible-expansion-its-business-opportunity-rule

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