Frequently Asked Questions for Form Series 2700 - Business Opportunities
1. Do I have to register as a business opportunity?
The Secretary of State does not decide if an individual or entity must register. The Legal Support Unit can provide, on request, a copy of the Business Opportunity Act ("Act"). The Act defines a "Business Opportunity", lists exemptions, and provides guidelines for registration. It is the seller's responsibility to determine whether the seller should register.
2. How do I register?
The principal seller of a business opportunity registers by filing with the Secretary of State a copy of all the disclosure statements required by the Act, as well as a list of the names and resident addresses of all salespersons
3. Do I have to provide a surety deposit in order to be registered?
The Act specifies that if a business opportunity seller makes certain representations delineated in the Act, the seller must provide a security deposit that is payable in favor of the State of Texas. The current amount of the bond is $25,000.00.
4. Does the Secretary of State investigate violations of the Act?
As stated above, the Secretary of State is the filing agency for documents required by the Act. Enforcement of the registration requirements and/or violations of the Act is the jurisdiction of the Texas Attorney General. A person that has been injured by the actions of a business opportunity seller may file a complaint with the Consumer Protection Division of the Attorney General's Office.
5. I am offering "franchises" and have filed disclosure statements with the Federal Trade Commission ("FTC"). Do I also have to file a registration statement with the State of Texas?
A franchisor is exempt from filing a Texas registration statement, if the franchisor complies in all material respects in the state of Texas with the disclosure requirements and prohibitions concerning franchising in the FTC regulations applicable to the franchisor. HOWEVER, prior to offering for sale or selling, the seller must file a notice of exemption with the Secretary of State and pay the applicable filing fee.
6. What information is required in the exemption notice?
There is a form, available from the Legal Support Unit, that is used for filing the exemption pursuant to an FTC franchise filing. It requires the name of the franchisor, the name under which the franchisor intends to do business, and the franchisor's principal business address.
7. Is there an expiration date for the registration?
The registration does not have a specific expiration date. However, the Act requires that the disclosure statement be updated whenever material changes occur. If no material changes occur, the disclosure statement must be updated at least once a year.
In addition, the list of salespersons must be updated through a new filing every six months.