Today the Federal Trade Commission released the final amended Business Opportunity Rule [PDF] which will take effect on March 1, 2012. The FTC Business Opportunity Rule regulates the offer and sale of business opportunity ventures which, unlike franchises, do not often involve the license of a trademark (for example, vending machines, Internet kiosks, 900 number ventures, and rack displays). Similar in purpose to the Amended FTC Franchise Rule, the Final Rule outlines the disclosure and proper sales methods required when offering business venture concepts.
There are two significant things to note about the new rule. First, the Final Rule was broadened to include sellers not already covered by the interim Business Opportunity Rule such as work-at-home business ventures. Second, the Final Rule simplifies the disclosures required of a business opportunity seller to make them less burdensome. Under the Final Rule, sellers will disclose only information the FTC has deemed to be the most important 5 “key items.” These items are:
- Seller’s identifying information;
- Earnings Claims;
- Legal/Litigation History;
- Cancellation/Refund Policy; and
- A List Containing Purchasers for the past 3 years.
The Final Rule prohibits misrepresentations and certain deceptive practices such as failing to make promised refunds or assigning purported exclusive territories to multiple purchasers. The FTC can pursue those who violate the Final Rule. Accordingly, business opportunity sellers should contact their franchising, licensing, and distribution counsel now to discuss the new requirements and to begin the preparation of sufficient disclosures under the Final Rule so that they will be compliant come March 1st.