FTC Staff Recommends Changes to Business Opportunity Rule

The FTC's Biz Opp Cops have recommended that the Business Opportunity Rule be expanded to include work-at-home opportunities like envelope stuffing, medical billing, and product assembly, many of which have not been covered before. An FTC staff report outlines other suggested changes, including streamlining the disclosures required by the Rule so that people buying business opportunities get important info in a simple, easy-to-read document. If adopted, the changes will make it easier for legitimate sellers to comply with the Rule, while still protecting entrepreneurs from what the reports says is "widespread and persistent" fraud in the sale of business opportunities.

Until recently, the FTC had a single rule – the Franchise Rule – that covered both franchises and certain business opportunities. In 2006, the FTC proposed the creation of a Business Opportunity Rule separate from the Franchise Rule and put an interim rule in place. The agency held a national workshop to consider the issue and asked for comments from the public.  The staff report summarizes what’s happened so far, analyzes the various alternatives, and offers recommendations for the proposed final Business Opportunity Rule. The report also includes samples of what the proposed new disclosure document would look like in English and Spanish.

Interested in commenting on the proposal?  You have until January 18, 2011.  Here's how to file a comment online. 

If you're thinking about investing in a franchise or business opportunity, consider these tips from the FTC about evaluating the offers.