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FTC Passes New Biz-Op Rule; Revamped Regulations, Which Will Impact Bulk Vending, Go Into Effect March 1

by Staff Reporter
Posted On: 12/5/2011

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WASHINGTON -- Aspiring businesspeople who want to explore vending machine businesses soon will be entitled to get a lot more information about opportunities before they invest. The Federal Trade Commission has approved changes to its Business Opportunity Rule to ensure consumers have the information they need when evaluating a work-at-home program or any other business opportunity.

The changes reportedly simplify the disclosures that business opportunity sellers must provide to prospective buyers to assist in assessing the risks. The new rules, the FTC said, will also minimize the compliance burdens on organizations offering business opportunities.

The latest regulations have special significance for merchandise and bulk vending. While business opportunities have helped popularize new categories of equipment and brought new operators into the industry, unscrupulous promoters selling shoddy equipment and promising unrealistic income potential have become persistent industry problems.

Set to take effect on March 1, the new rules require sellers to disclose five key items of information in a one-page document:

» More information about who they are, including the seller's name, business location and phone number.

» Supporting information for any earnings claims, including the number and percentage of people who hit that mark.

» Whether legal actions alleging fraud or misrepresentation have been brought against the seller, its affiliates or "key personnel."

» More detailed information about cancellation and refund policies.

» Names and contact information for references who participated within the past three years.

Misrepresentations and omissions are prohibited under the new regulations and all disclosures must be provided in the language in which the sale is conducted.

The announcement of a final Business Opportunity Rule completes the process that started when the commission published an Initial Notice of Proposed Rulemaking and proposed creating a biz-op rule separate from the Franchise Rule.

For more information, see the FTC's:

Selling a Work-at-Home or Other Business Opportunity? Revised Rule May Apply to You

Looking to Earn Extra Income? Rule Helps You Avoid Bogus Business Opportunity Offers

Watch the Business Opportunity Rule video: