New FTC Business Opportunity Rule
"The proposed rule would eliminate the $500 minimum investment requirement from the Franchise Rule, meaning it would apply to all business opportunities, even if they have a smaller start-up cost. The proposed rule also would eliminate many of the 20 disclosures that are required for franchises (trademarks, for example), but do not apply to business opportunities. Instead, the proposed rule would require a one-page disclosure addressing five items: whether or not sellers make earnings claims; a list of any criminal or civil legal actions against the seller or its representatives that involve fraud, misrepresentations, securities, or deceptive or unfair trade practices; whether the seller has cancellation or refund policies and such policies’ terms; the total number of purchasers in the past two years and the number of those purchasers seeking a refund or to cancel in that time period; and a list of references." (my emphasis)
The text of the proposal can be found here.
Will this new 1 page disclosure document reduce business opportunities fraud?
Technorati Tags: business opportunities, franchise rule, ftc, trademarks, new business, unfair trade, legal actions, minimum investment, deceptive, franchises, cancellation, disclosure, fraud, earnings
Of course not, the biz op scammers will be happy to fill out a crappy disclosure statement, one that is misleading and deceptive. Why? Because the form will state:
"that the information contained in the disclosure document "can help you in deciding whether to purchase a business opportunity." At the same time, it cautions that “no governmental agency has verified the information." (my emphasis)
Bizop scammers in the past failed to produce the necessary disclosure because of the cost; now they can produce a 1 page document required by the Federal Government. Think that this will become a selling feature!!? I predict great things for biz op scammers when this Rule passes.
Technorati Tags: business opportunities, franchise rule, ftc, trademarks, new business, unfair trade, legal actions, minimum investment, deceptive, franchises, cancellation, disclosure, fraud, earnings
