26 Ways to Perform Due Diligence
What State Offices can you get information regarding Business Opportunity Disclosure Laws?
"Twenty-six states have business opportunity laws. Most of these laws prohibit sales of business opportunities unless the seller gives potential purchasers a pre-sale disclosure document that has first been filed with a designated state agency.
State business opportunity laws typically cover every imaginable type of business opportunity that might be offered. If a business opportunity seller is not required to provide pre-sale disclosures by the Franchise Rule, these disclosures will almost always be required by the laws of the states listed below.
The disclosures required by state business opportunity laws differ, and usually provide more abbreviated information than the FTC’s Franchise and Business Opportunity Rule requires. However, most of these laws provide important rights and remedies for business opportunity investors, including required security bonds to cover investor losses.
If you are considering purchasing a work-at-home or other business opportunity, and reside in a state with a business opportunity law, we encourage you to find out more about the protection provided by your state statute before you invest."
This last bit of advice is, unfortunately, useless or likely to be misunderstood. You cannot phone, write, or communicate by email with these State Offices and expect them to vet your favourite business opportunity, nor will they direct you to any specific attorney or lawyer for assistance. Nor does it mean anything if the business opportunity is registered with the State Office. And I certainly would not rely upon the provision of a bond to cover my losses, either.
Generally, the point of knowing what information you are entitled to allows you with confidence to ask for and demand that information. Probably the most important information to demand is a list of "prospective" purchasers so that the cost of due diligence can be shared among the group. You won't pay much more than $500 if there is a good chance that the $500 will turn out to reveal very bad news.
