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An Overview of Federal and State Business Opportunity Laws

Guest post by: Keith Kanouse

Article Overview: Business opportunities are regulated under the FTC Business Opportunity Rule (16 C.F.R. Part 437) and by 25 states with business opportunity laws requiring pre-sale disclosure and, in most of these states, registration of the business opportunity offering. While “business opportunities” and “franchises” are somewhat similar because both involve the sale of a product or service to enable a person to start a business, one of the principal differences in the definitions used in the statutes is that there is no license of a trademark or substantial association with a trademark in connection with a business opportunity. Franchisors should be aware of these laws, because they may be a trap for the unwary franchisor, particularly if the franchisor’s principal trademark has no

An Overview of Federal and State Business Opportunity Laws

Business opportunities (also called "seller-assisted marketing plans" in certain states) are regulated under the FTC Business Opportunity Rule (16 C.F.R. Part 437) and by 25 states with business opportunity laws requiring pre-sale disclosure and, in most of these states, registration of the business opportunity offering. While "business opportunities" and "franchises" are somewhat similar because both involve the sale of a product or service to enable a person to start a business, one of the principal differences in the definitions used in the statutes is that there is no license of a trademark or substantial association with a trademark in connection with a business opportunity. Franchisors should be aware of these laws, because they may be a trap for the unwary franchisor, particularly if the franchisor's principal trademark has not been registered on the Principal or Supplementary Register of the U.S. Patent and Trademark Office. Franchisees should be aware of these laws because they may provide a source of legal rights in states without traditional franchisee-protection statutes. This article focuses on business opportunity sellers but mentions franchisors where the business opportunity laws may come into play.

FTC BUSINESS OPPORTUNITY RULE

The FTC Business Opportunity Rule regulating "business opportunity ventures" regulates only one type of business opportunity - (i.e., vending machines/rack displays coupled with accounts or location assistance - referred to in this article as "Type 1" opportunities). State laws, on the other hand, regulate several different types of business opportunities. These may be categorized into 5 general types: vending machines and rack displays (Type 1); repurchase of products grown, manufactured or assembled (Type 2); guarantee of investment (Type 3); sales or marketing program (Type 4), and representation that there is a market for particular goods and/or services (Type 5).

The FTC Business Opportunity Rule defines a "business opportunity venture" as: (i) the seller sells goods or services which are supplied by the seller or a person affiliated with the seller; (ii) the seller assists the buyer in any way with respect to securing accounts for the buyer or servicing accounts for the buyer or securing locations or rates for vending machines or rack displays, or providing the services of a person able to do either; and (iii) the buyer is required to make a payment of $500 or more to the seller or a person affiliated with the seller at any time before or within 6 months after the business opens.

Every business opportunity venture falling under the FTC Business Opportunity Rule must use the FTC Disclosure Statement as its disclosure statement until the proposed new FTC Business Opportunity Rule becomes effective. The FTC Disclosure Statement must be given to a prospective business opportunity buyer in the United States and its Territories including Puerto Rico or U.S. Virgin Islands. Fortunately, most of the business opportunity states will readily accept the FTC Disclosure Statement since it contains greater disclosure than is usually required by state law. The seller must also comply with the FTC's 10-business day and 5-business day rule, even if state law provides for a shorter period.

If a business opportunity is not subject to the FTC Business Opportunity Rule, then the seller can use either the FTC Disclosure Statement or prepare a shorter, less comprehensive disclosure statement required by state law. However, exercising the option to use a shorter document is probably not a good idea since state laws vary and the seller will probably have to make significant changes and addenda for each state - something that is less extensive and burdensome if the FTC Disclosure Statement is used. The FTC Business Opportunity Rule does not completely preempt state law. Therefore, if an opportunity is subject to the FTC Business Opportunity Rule, it must comply with the Rule's requirements and must also comply with various state requirements, if they afford greater protection to purchasers. For example, while the FTC Business Opportunity Rule has a 3-year phase in of audited financial statements, certain states require audited statements from inception.

STATE BUSINESS OPPORTUNITY LAWS

The State of Florida's definition of a business opportunity contained in Subsection 559.801(1)(a) of the Florida States is typical:

"Business opportunity" means the sale or lease of any products, equipment, supplies, or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller, and in which the seller represents:

1. That the seller or person or entity affiliated with or referred by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or seller ("Type 1");

2. That the seller will purchase any or all of the products made, produced, fabricated, grown, bred or modified by the purchaser using in whole or in part the supplies, services, or chattels sold to the purchaser ("Type 2");

3. That the seller guarantees in writing that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent charged for the business opportunity; or will repurchase any of the products, equipment, supplies, or chattels supplied by the seller, if the purchaser is unsatisfied with the business opportunity ("Type 3"); or

4. That the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the business opportunity, except that this paragraph does not apply to the sale of a sales program or marketing program made in conjunction with the licensing of a trademark that is registered under the laws of any state or of the United States ("Type 4").

For purposes of subparagraph 1, the term "assist the purchaser in finding locations" means, but is not limited to, supplying names of locator companies, contracting with the purchaser to provide assistance or supply names or collecting a fee on behalf of or for a locator company.

Other states regulate these 4 Types and an additional type of business opportunity under broad standards such as "the seller will provide a marketing plan." ("Type 5")

Twenty-five states have business opportunity laws that require special changes to the generic disclosure document and 20 of these states require registration or notice to the state before advertising in the states or selling business opportunities in these states or to residents of these states. There are registration fees ranging from $10 to $500, as well as filing fees for amending registrations and renewing registrations. The remaining 25 states have no specific laws regulating business opportunities.

EXEMPTION FOR FRANCHISORS

Some state business opportunity laws specifically exempt franchisors that are in compliance with the FTC Franchise Rule. Still other state business opportunity laws exempt franchisors because the franchisor's sales or marketing program (Type 4) is associated with a licensed registered trademark. The type of "trademark registration" required varies from state to state. Most states will accept either a state-registered or a federally-registered trademark. If the trademark is not currently registered on the Principal Register or Supplement Register of the U. S. Patent and Trademark Office but the application has been filed and is pending registration, it is not "federally-registered." Certain states have more particular requirements:

Alaska Expressly exempts franchisors under the FTC Franchise Rule.

California Expressly exempts franchisors under the FTC Franchise Rule.

Connecticut Must have a federally-registered trademark, a copy of which is filed with the Commissioner of Banking. A state-registered mark is not sufficient and a franchisor must then register as a business opportunity.

Florida Expressly exempts franchisors under the FTC Franchise Rule with the filing of an Annual Notice of Franchise Exemption and payment of $100 filing fee.

Illinois Expressly exempts franchisors under the Illinois Franchise Disclosure Act of 1987 and/or registered as a franchisor in Illinois.

Indiana Expressly exempts franchisors under the Indiana Franchise Act.

Iowa Expressly exempts franchisors as defined under Iowa law provided a FTC Disclosure Statement or FDD is given.

Kentucky Expressly exempts franchisors under the FTC Franchise Rule.

Maine Must have a federally-registered trademark. A state-registered mark is not sufficient and a franchisor must then register as a business opportunity.

Maryland Expressly exempts franchisors registered in Maryland or exempt under the Maryland Franchise Law.

Nebraska Must be a Nebraska-registered trademark or a federally-registered trademark. Franchisors are also exempted if they comply with the FTC Franchise Rule, file a Notice of Exemption and pay a $100 filing fee.

N. Carolina Must have a federally-registered trademark. A state-registered mark is not sufficient and a franchisor must then register as a business opportunity.

If the franchise offering meets the requirements of the additional definitions of a business opportunity under state law, Types 1, 2, 3, or 5, (e.g., buy-back, guarantee) and a franchise is not specifically exempted from registration, prudence dictates that the franchisor register as a business opportunity.

LARGE FRANCHISOR EXEMPTION

Certain high net worth franchise sellers are exempt from registration:

California At least $10,000,000 net worth

Illinois At least $1,000,000 net worth.

Georgia At least $15,000,000 net worth.

Indiana At least $5,000,000

MINIMUM INITIAL INVESTMENT

The FTC Business Opportunity Rule has an initial investment threshold of $500 on or before the first 6 months of operation and most states' business opportunity laws have a similar initial investment threshold of $500, thereby making programs costing under $500 exempt from disclosure and registration. But the following business opportunity states have lower threshold amounts or a longer payment period, thereby subjecting certain programs of less than $500 to state registration:

Alaska $250

Connecticut $200

California $500 to $50,000 on or before the first 6 months of operation

Georgia $500 on or before the first 6 months of operation

Louisiana over $300

Maine over $250 on or before the first six months of operation

Maryland $300

Michigan $500 on or before the first six months of operation

Nebraska over $500 on or before the first six months of operation

North Carolina $200

Oklahoma $500 on or before the first year of operation

South Carolina $250

South Dakota $250 on or before the first six months of operation

Texas $500 on or before the first six months of operation

Utah $300 on or before the first six months of operation

Washington $300

LARGE INITIAL INVESTMENT EXEMPTION

A few states will exempt an offering from registration if the amount of the initial investment is above a certain figure (and, in some cases, under a certain percentage of the purchaser's net worth)

California Above $50,000

Illinois Where the purchaser's immediate cash payment is at least $25,000 and does not exceed 20% of the purchaser's net worth or that net worth is over $250,000 as determined exclusive of principal residence, furnishings therein, and automobiles

Indiana Above $50,000

Ohio Above $50,000

Oklahoma Where the purchaser's immediate cash payment is at least $25,000 if the immediate cash payment does not exceed 20% of the purchaser's net worth or that net worth is over $250,000 as determined exclusive of principal residence, furnishings therein, and automobiles

South Carolina Where the purchaser's immediate cash payment is at least $25,000 if the immediate cash payment does not exceed 20% of the purchaser's net worth or that net worth is over $250,000 as determined exclusive of principal residence, furnishings therein, and automobiles

South Dakota Where the immediate cash payment made by the purchaser is at least $25,000 if the immediate cash payment does not exceed 20% of the purchaser's net worth or that net worth is over $250,000 as determined exclusive of principal residence, furnishings therein, and automobiles

AUDITED FINANCIAL STATEMENTS

If a business opportunity offering is subject to the FTC Business Opportunity Rule, there is a 3-year phase in of audited financial statements. While most states do not require audited financial statements, Connecticut, Illinois, Kentucky, Maryland, Minnesota, New Hampshire and Oklahoma do require audited financial statements from the inception as part of their registration requirements. So if you want to register in any of these states within the next 3 years, start out with audited financial statements, initially with an opening audited balance sheet if the business opportunity seller is a start-up.

SURETY BONDS

Some states require all business opportunity sellers to post a security bond. Alaska requires a $75,000 bond. Indiana requires a bond or irrevocable letter of credit of at least $75,000 or 20 times the initial payment. Louisiana and Virginia require a $50,000 bond. Louisiana also requires that each salesperson must also post a $25,000 bond. Maine requires a $30,000 bond or escrow if the seller's home office is outside Maine. Kentucky requires a $75,000 surety bond or an assignment of a certificate of deposit. Illinois requires a bond of at least $25,000 if the seller's net worth is less than $25,000. Iowa requires a $25,000 surety bond if the seller does not have a net worth of at least $25,000. California, Connecticut, Florida, Georgia, Illinois, Iowa, Maryland, Nebraska, North Carolina, Ohio, South Carolina, South Dakota, Texas, Virginia and Washington require a surety bond if the seller makes certain representations, such as a guarantee of the purchase or a buy-back of the business opportunity, if the purchaser is dissatisfied.

ESCROW ACCOUNTS

Certain states prohibit the seller from taking the entire purchase price up front. Alaska, California, Indiana, Kentucky and Nebraska limit it to no more than a 20% deposit. The Georgia limit is a 15% deposit. In these states, any excess amount must be deposited into a special escrow account held by a financial institution located in that state or other approved escrow agent. Maine allows a $30,000 escrow in lieu of a surety bond.

REGISTERED AGENTS

California, Michigan and South Carolina require that the Seller appoint a person or company located in that state, other than the Secretary of State or other governmental official, to act as registered agent to receive service of process.

SALESPERSONS

Certain states require salespersons to register, or for the seller to provide a list of salespersons who will be selling the business opportunity to prospective purchasers subject to that state's business opportunity law.

California Statement of each Salesperson

Connecticut Individual registration

Florida Individual registration

Illinois List of Salespersons (names and addresses)

Nebraska List of Salespersons (name and addresses) every 6 months

Oklahoma List of Salespersons (to be included in disclosure document)

Texas List of Salespersons every 6 months

ADVERTISING MATERIALS

A number of states require that all advertising materials directed toward prospective purchasers, including advertisements intended to appear in publications located in that state, must be filed with the state as part of the registration process. This does not include advertising on the Internet or on the seller's web site.

Alaska File advertising materials before use

California File advertising materials before use

Florida No filing of advertising materials but advertising materials must include the Florida Advertising Identification Number

Indiana No filing of advertising materials but advertising materials must include the Indiana Registration Number

Kentucky No filing of advertising materials but advertising materials must include the Kentucky Registration Number

South Carolina File advertising materials before use

Utah File advertising materials before use

Washington File advertising materials before use

PRE-SALE DELIVERY OF DISCLOSURE DOCUMENT

If the Seller is subject to the FTC Business Opportunity Rule, then the prospective purchaser must have the FTC Disclosure Statement at least 10 business days before the prospective purchaser can give any money to the seller or sign any agreement with the seller. This 10-business day rule preempts state laws having a shorter period of time. In addition, the FTC Business Opportunity Rule requires that the purchaser receive the completed contract with all the blanks filled in at least 5 business days before the prospective purchaser can give any money to the seller or sign any agreement with the seller.

If the FTC Business Opportunity Rule does not apply to the business opportunity offering, states have differing pre-sale periods ranging from 2 days to 10 business days:

Alaska 10 days

California 48 hours

Connecticut 10 business days

Florida 3 working days

Georgia 48 hours

Illinois 10 business days

Indiana 72 hours

Iowa 10 days

Maine 72 hours

Maryland 10 business days

Nebraska 48 hours

New Hampshire 7 days

North Carolina 48 hours

South Carolina 48 hours

Virginia 48 hours

POST-SALE RIGHT TO RESCIND

Under the FTC Business Opportunity Rule, there is no post-sale right to rescind the purchase. Certain states, however, do provide a post-sale right to cancel by all sellers, even those regulated by the FTC Business Opportunity Rule:

Alaska 30 days - A Notice of Buyer's Right to Cancel must be included in the purchase order or purchase agreement.

California 3 days - A Notice of Cancellation must appear immediately above the signature line in the purchase order or purchase agreement.

Indiana 30 days - A Notice of Cancellation must appear in the purchase order or purchase agreement.

Iowa 3 days - A Notice of Cancellation must appear in the purchase order or purchase agreement.

Kentucky 30 days - A Notice of Cancellation must appear in the purchase order or purchase agreement.

Maine 3 days - A Notice of Right of Avoidance must appear in the purchase order or purchase agreement.

Maryland 3 days - A Notice of Cancellation must appear in the Disclosure Document.

Nebraska 3 days - A Notice of Right to Cancel must appear in the purchase order or purchase agreement.

Ohio 5 business days - A Notice of Cancellation must be included in the Disclosure Document.

Washington 7 business days - A Notice of Cancellation must be included in the purchase order or purchase agreement.

DELIVERY OF PRODUCTS REQUIREMENTS

Most states require the seller's contract to provide that the items being purchased as part of the business opportunity must be delivered within a specified period of time. Otherwise, the purchaser has a right to cancel the contract.

California Within 30 days from the specified delivery date

Connecticut Within 45 days from the specified delivery date

Florida Within 45 days from the specified delivery date

Georgia Within 45 days from the specified delivery date

Indiana Within 45 days from the specified delivery date

Kentucky On or before the specified delivery date

Maryland Within 45 days from the specified delivery date

Nebraska Within 30 days from the specified delivery date

North Carolina Within 45 days from the specified delivery date

South Carolina Within 45 days from the specified delivery date

Texas Within 45 days from the specified delivery date

Virginia Within 45 days from the specified delivery date

STATE-BY-STATE SUMMARY

Below is a brief summary of the business opportunity disclosure and registration laws in all 50 states. This summary assumes the business opportunity program does not meet the definition of a "franchise" under federal and state franchise laws. Special state requirements are set forth in bold.

ALABAMA

There is no business opportunity registration law, however, the Alabama Deceptive Trade Practices Act makes unlawful any misrepresentations in the sale of seller-assisted marketing plans.

ALASKA

A business opportunity registration law was enacted in July 2002. The law covers initial investments of $250 or more and requires registration. The filing fee is $300 and the recommended filing time is 60 days. Registration entails the filing an FTC Disclosure Statement or an Alaska Disclosure Document with Alaska Cover Page and Alaska Addendum. The seller cannot require a deposit of more than 20% of the purchase price, unless the excess above 20% is placed in escrow with an independent third party. The money cannot be disbursed until 30 days have passed since the buyer signed the contract and the buyer notifies the escrow agent that the buyer has received the products sold. A $75,000 surety bond is also required. A List of Salespersons must also be filed. The Disclosure Document must be given at least 10 days before signing the agreement or the acceptance of any money including any deposits. Advertising materials must be filed. Audited financial statements are required. You must wait 30 days after registration before you can begin the sales process.

ARIZONA

There is no business opportunity law and business opportunity registration is not required.

ARKANSAS

There is no business opportunity registration law and business opportunity registration is not required.

CALIFORNIA

The business opportunity law "Contracts for Seller-Assisted Marketing Plan" Act covers initial investments between $500 and $50,000. Registration is required, with a recommended filing time of 45 days. The registration fee is $100. Proper registration requires the filing of a Disclosure Document, a list of the names and resident addresses of individuals selling the business opportunity in California, copies of advertising materials and a consent to service of process. The Disclosure Document must include information regarding all 10% or more owners of the seller. The Disclosure Document must be given at least 48 hours before signing the agreement or the acceptance of any money including deposits, with 3 days allowed for cancellation after signing the agreement. No more than a 20% deposit is allowed until product and training have been delivered. If more than 20% is taken, the amount above 20% must be placed in escrow. A registered agent in California must also be appointed.

COLORADO

There is no business opportunity registration law and business opportunity registration is not required.

CONNECTICUT

The business opportunity law covers initial investments of $200 or more. Registration is required, and involves filing a Disclosure Document (substantially similar to a FTC Disclosure Statement) with Connecticut Cover Page with the state along with Connecticut's CT BOIA-1 Application to Register a Business Opportunity Investment, a Verification, and Consent to Service of Process (Form CT BOIA). A current audited financial statement is required. The filing fee is $400. The seller must give the Disclosure Document at least 10 business days before the receipt of any money.

DELAWARE

There is no business opportunity registration law and business opportunity registration is not required.

FLORIDA

The business opportunity law covers initial investments of $500 or more and requires registration. The filing fee is $300 and the recommended filing time is 45 days. Registration requires the filing of a Filing Application Florida Business Opportunity, FTC Disclosure Statement or Florida Disclosure Document with Florida Cover Page and Florida Addendum. Independent Sales Agent Addenda must also be filed. The Disclosure Document must given at least 3 working days before the receipt of any money by the seller.

GEORGIA

The business opportunity law covers for initial investments of $500 on or within the first 6 months of operation. The officers must provide a Disclosure Document to prospective purchasers. While registration of the disclosure document with the state is not required, a consent to service of process must be filed with the State of Georgia along with a fee of $10. The Disclosure Document must be given at least 48 hours before the receipt of any money by the seller. Only up to 15% of the purchase price can be collected on sale. The seller must escrow the balance with an independent third party acceptable to the parties until 60 days after the purchaser commences operation or upon complete compliance with terms of contract, whichever occurs first.

HAWAII

There is no business opportunity law and business opportunity registration is not required.

IDAHO

There is no business opportunity law and business opportunity registration is not required.

ILLINOIS

Illinois's business opportunity registration law covers initial investments of $500 or more, and requiring registration. The filing fee is $300 and the recommended filing time is 60 days. Registration entails the filing an FTC Disclosure Statement or an Illinois Disclosure Document with Illinois Cover Page and Illinois Addendum and Consent to Service of Process. A List of Salespersons must also be filed. The Disclosure Document must be given at least 10 days before signing the agreement or the acceptance of any money including deposits by the seller. Audited financial statements are required. No bond is required unless the seller is worth less than $25,000 or if the seller makes any buy back or guaranteed earnings statements in the agreement (in which case the bond must be for no less that $25,000).

INDIANA

The business opportunity law requires registration and covers initial investments between $500 and $50,000. Registration is required. The filing fee is $50 and the recommended filing time is 30 days. Registration requires the filing of a Disclosure Document and a surety bond obtained in an amount equal to at least 20 times the initial purchase price of the business opportunity, but not less than $75,000. The Disclosure Document must be given at least 3 days before the receipt of any money by the seller. The purchaser has 30 days in which to cancel the agreement after signing. No more than a 20% deposit is allowed until the product is delivered, and any sum received above that amount must be placed in escrow until that time.

IOWA

The business opportunity law requires the filing of an Irrevocable Consent with the Secretary of State. The seller must give each prospective purchaser a FDD, FTC Disclosure Statement or Iowa Disclosure Statement including the Iowa Cover Page. The Disclosure Document must be given at least 10 days before the receipt of any money by the seller, and the purchaser has 3 days after signing the agreement in which to cancel.

KANSAS

There is no business opportunity law and business opportunity registration is not required.

KENTUCKY

The business opportunity law covers initial investments of $500 or more and requires registration. Registration requires the filing of an FTC Disclosure Statement or Kentucky Disclosure Document with a Kentucky Cover Page. The filing fee is $150 and the recommended filing time is 30 days. The Disclosure Document is required and the purchaser has 30 days after signing the contract in which to cancel. A $75,000 surety bond or assignment of a certificate of deposit of an account with a financial institution doing business in Kentucky is required. No more than 20% is to be collected until the product, equipment or service is delivered. The balance must be deposited into escrow. A current audited financial statement is also required.

LOUISIANA

The business opportunity law covers initial investments of $300 or more. The Louisiana Secretary of State must be appointed agent for service of process. The filing fee is $10. In addition, the officer must obtain a surety bond by a surety company authorized to do business in Louisiana in the amount of $50,000 and must file evidence of this bond with the state. Each salesperson may also need a $25,000 surety bond.

MAINE

The business opportunity law requires registration and covers initial investments of $250 or more. Registration requires filing a FTC Disclosure Statement or Maine Disclosure Document and a $30,000 surety bond or escrow agreement with the state, if the seller does not have an office in the state. The filing fee is $25. The Disclosure Document must be given at least 72 hours before receipt of any money by the seller. The purchaser has 3 days in which to cancel the agreement after signing.

MARYLAND

The business opportunity law covers initial investments of $300 or more and requires registration. The filing fee is $250 and the recommended filing time is 30 days. Registration requires the filing of a FTC Disclosure Statement or Maryland Disclosure Document including Maryland Cover Page and Maryland Addendum to Purchase Order. A current audited financial statement is required. The Disclosure Document must be given at least 10 business days before receipt of any money by the seller, and the purchaser has 3 days in which to cancel the agreement after signing.

MASSACHUSETTS

No business opportunity registration law is enacted. No business opportunity registration is

required.

MICHIGAN

The business opportunity law covers for investments of $500 or more on or before the first 6 months of operation. Filing of notice of intention to sell business opportunities is required. A registered agent in Michigan must also be appointed. The filing fee is $-0- and the recommended time of filing is 30 days.

MINNESOTA

Minnesota covers business opportunities within its definition of the "franchise" in its general franchise disclosure/registration law. The franchise registration law requires that registration, with a recommended filing time of 90 days. The seller must file a Franchise Disclosure Document including audited financial statements along with related documents, consisting of: application page, supplemental information sheet, salesman's disclosure form, certification page, advertising proposed for use in Minnesota, consent to service of process, consent of accountant to use of reports relating to financial statements of business opportunity sellers and state specific addenda and cover page. The Disclosure Document must be given at least 10 days before receipt of any money by the seller, and the registration fee is $400.

MISSISSIPPI

There is no business opportunity law and business opportunity registration is not required.

MISSOURI

There is no business opportunity law and business opportunity registration is not required.

MONTANA

There is no business opportunity law and business opportunity registration is not required.

NEBRASKA

The business opportunity law governing seller-assisted marketing plans covers initial investments of over $500 paid on or before the first 6 months of operation and requires registration. The filing fee is $100 and the recommended filing time is 30 days. Registration requires filing of a Notice of Exemption, Disclosure Document, list of sales representatives and verification. The Disclosure Document must be given at least 48 hours before receipt of any money by the seller. The purchaser has 3 days in which to cancel, and a notice of Right to Cancel is required. If an FTC Disclosure Statement is used, the only document that gets registered is a Notice of Exemption.

NEVADA

There is no business opportunity law and business opportunity registration is not required.

NEW HAMPSHIRE

There is no business opportunity registration statute and registration is not required. If your business opportunity involves vending machines, racks, display cases or other similar devices, you may be required to register under New Hampshire's Distributorship Disclosure Act. The registration fee is $50 and the recommended filing time is 30 days. Registration requires the filing of a Disclosure Document and consent to service of process. Audited financial statements are required. The Disclosure Document must be given at least 7 days before the receipt of any money received by the seller.

NEW JERSEY

There is no business opportunity law and business opportunity registration is not required.

NEW MEXICO

There is no business opportunity law and business opportunity registration is not required.

NEW YORK

There is no business opportunity law and business opportunity registration is not required.

NORTH CAROLINA

The business opportunity law requires registration and covers initial investments of $200 or more. Registration involves filing the Disclosure Document, which must be given to a prospect at least 48 hours before the receipt of any money by the seller. The filing fee is $10.

NORTH DAKOTA

There is no business opportunity law and business opportunity registration is not required.

OHIO

The business opportunity law covers initial investments of $500 or more but less than $50,000. Registration is not required; however, disclosure must be provided including an Ohio Cover Page and a Notice of Cancellation. The Disclosure Document must be given at least 10 days before receipt of any money by the seller. If a business opportunity disclosure statement is used rather than a FTC Disclosure Statement, the purchaser has 5 days in which to cancel the agreement.

OKLAHOMA

The business opportunity law covers initial investments of $500 or more paid on or before the first year of operation. Registration is required. The registration fee is $250 and the recommended filing time is 30 days. Registration requires the filing of a Disclosure Document, state specific cover sheet and consent to service of process. The Disclosure Document must be given at least 10 days before receipt of any money by the seller. An audited financial statement is required. There is an exemption from registration if a FTC Disclosure Statement is used but the seller must still file Consent to Service and use an Oklahoma Cover Page.

OREGON

There is no business opportunity law and business opportunity registration is not required.

PENNSYLVANIA

There is no business opportunity law and business opportunity registration is not required.

RHODE ISLAND

There is no business opportunity law and business opportunity registration is not required.

SOUTH CAROLINA

The business opportunity law covers initial investments of $250 or more. Registration is required. The registration fee is $100 and the recommended filing time is 30 days. Registration requires the filing of a South Carolina Application of Business Opportunity;. South Carolina Disclosure Statement including the South Carolina Cover Page and South Carolina Addendum to Purchase Order; South Carolina Consent to Service of Process and Corporate Acknowledgment. A registered agent in South Carolina must be appointed. The Disclosure Document must be given at least 48 hours before the receipt of any money by the seller.

SOUTH DAKOTA

The business opportunity law covers initial investments of $250 or more and requires registration. The registration fee is $100 and the recommended filing time is 30 days. Registration requires the filing of a Disclosure Document, state specific cover sheet and consent to service of process. The Disclosure Document must be given at least 10 days before the receipt of any money by the seller.

TENNESSEE

There is no business opportunity law and business opportunity registration is not required.

TEXAS

The business opportunity law requires registration and covers for initial investments of $500 or more. The registration fee is $195 and the recommended filing time is 30 days. Registration requires the filing of a Disclosure Document, including identification of a registered agent and List of Salespersons to be updated every 6 months. The Disclosure Document must be given at least 10 days before the receipt of any money by the seller.

UTAH

The business opportunity law is covers initial investments of $300 or more and requires registration. The registration fee is $200 and the recommended filing time is 30 days. Registration requires the filing of a Disclosure Document including Utah Cover Page and Utah Addendum to FTC Disclosure Statement and Utah Addendum to Purchase Order. The Disclosure Document must be given at least 10 days before the receipt of any money by the seller.

VERMONT

There is no business opportunity law and business opportunity registration is not required.

VIRGINIA

The business opportunity law covers for initial investments of $500 or more. Registration is not required; however, disclosure must be made to prospective purchasers. The Disclosure Document must be given at least 48 hours before receipt of any money by the seller. The Seller is required to establish a trust account or surety bond within the state of at least $50,000.

WASHINGTON

The business opportunity law covers initial investments of $300 or more and requires registration. The registration fee is $200 and the recommended filing time is 30 days. Registration requires the filing of a Washington Business Opportunity Application; Business Opportunity Disclosure Document with Washington Cover Page; Washington Consent to Service of Process and all advertising materials proposed for use in Washington. The Disclosure Document must be given at least 48 hours before receipt of any money by the seller. The purchaser has 7 days in which to cancel the agreement and the notice of cancellation as required by the state must be included with the agreement.

WEST VIRGINIA

There is no business opportunity law and business opportunity registration is not required.

WISCONSIN

There is no business opportunity law and business opportunity registration is not required.

WYOMING

There is no business opportunity law and business opportunity registration is not required.

DISTRICT OF COLUMBIA

There is no business opportunity law and business opportunity registration is not required.

PUERTO RICO AND U.S. VIRGIN ISLANDS

There is no business opportunity law and business opportunity registration is not required.

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Article Tags: FTC Business Opportunity Rule State Business Opportunity Laws



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Franchising & Licensing Can Be The Same Thing - FTC Rule 436 defines franchising as anyone offering an Agreement that contains these 3 things: 1. Licensing a "Mark" - which can be a trade name, service mark, commercial symbol, slogan, etc. 2. In the body of the Agreement, there contains, significant controls and assistance. 3. The licensee is paying the licensor in excess of $500 within the first six months of the actual offering of the business. Licensing and Franchising can mean the same thing today. If you do not decide to franchise and comply with FTC Rule 436, you may be in violation of Business Opportunity Laws that exist in 24 individual States.
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