Wednesday, March 19, 2008

FTC Seeks Comments on New Proposal for Business Opportunities Rule

This posting was written by Pete Reap, Editor of CCH Business Franchise Guide.

The Federal Trade Commission has approved the publication of a Federal Register notice seeking comments on a revised proposal for a new trade regulation rule government business opportunities.

In April 2006, the Commission proposed a business opportunity rule separate from the FTC franchise disclosure rule. Part of the proposal was to expand coverage to business arrangements that were not formerly covered by the franchise rule and to streamline disclosure obligations. Currently, business opportunities formerly covered by the franchise rule remain covered under an interim business opportunity rule.

According to a March 18, 2008 announcement, the revised notice of proposed rulemaking (RNPR) will modify the April 2006 proposal for the business opportunity rule. The RNPR will be published soon and is available here on the FTC website, along with directions for providing comments.

The RNPR is more narrowly focused than the April 2006 proposal, according to the FTC. As now proposed, the business opportunity rule would continue to cover those schemes currently covered by the interim business opportunity rule and would expand coverage to include work-at-home schemes. The revised proposal, however, would not reach multi-level marketing companies or certain companies that could have been swept inadvertently into the scope of the April 2006 proposal.

It also streamlines the requirement to disclose material information by eliminating requirements to disclose the number of cancellations and refund requests that a business that a business opportunity seller receives or the litigation history of sales personnel.

The Commission will accept comments on the RNPR through May 27, 2008. Rebuttal comments may be made through June 16, 2008. A news release on the proposal appears on the FTC website.

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