FTC Proposes New Business Opportunity Rule

The FTC has published a Notice of Proposed Rulemaking to promulgate a trade regulation rule governing the sale of business opportunities. Currently, the FTC regulates business opportunities under two laws, the Franchise Rule and the FTC Act. The proposed "Business Opportunity Rule" would eliminate the $500 minimum investment requirement that is in the Franchise Rule, meaning it would apply to all business opportunities even if they have a smaller start-up cost. The proposed rule would require a one-page disclosure addressing five items and would prohibit certain unfair and deceptive practices that are common among fraudulent business opportunity sellers. The FTC is seeking comment on the proposed rule, and the comment period will close June 16, 2006. This is the first trade regulation rule proceeding since 1979. For more information see this link.