FTC Proposes New Business Opportunity Rule

On April 12, 2006, the Federal Trade Commission ('FTC') published in the Federal Register (Business Opportunity Rule 71 Fed. Reg. 19054 (proposed April 12, 2006) (to be codified at 16 CFR Part 437)) a Notice of Proposed Rulemaking for the FTC's long-awaited business opportunity rule ('Bus Opp Rule'). The Bus Opp Rule will cover business opportunity sellers who now are covered by the FTC's franchise trade regulation rule ('Franchise Rule'), as well as sellers of certain business opportunities who are not now covered by the Franchise Rule. The FTC has long believed that the same regulation was not the best way to regulate both business opportunity sellers and franchisors. More specifically, the FTC has concluded that each group's special characteristics (such as history of consumer protection problems, sophistication of its target purchasers, required investment commitment, and complexity of business system) required a different regulatory approach. The Bus Opp Rule is designed to create a regulatory scheme to focus on the special characteristics of business opportunities. Until the Bus Opp Rule is promulgated, business opportunity sellers must continue to comply with the current and, if and when adopted, amended Franchise Rule.

9 minute read May 31, 2006 at 01:34 PM

By

John M. Tifford