Many Business and Opportunity Companies and their owners are quite upset that the FTC or Federal Trade Commission is making them a separate category from the Franchise Rule, but there are good reasons for this. You see there is a big difference from Business Opportunities, Multi-Level Marketing and the World of Franchising. Franchising represents nearly 35% of the consumer spending in our GDP and does it with fewer than 3500 Corporations. The fraud rates in franchising is under 1% based on complaints at the FTC or Federal Trade Commission. In the recent rule and regulations reviews on Franchising and Biz Ops under the franchise rule many commenters on both sides of this debate spoke out. It seems that; Rule Review and ANPR commenters and participants overwhelmingly urged the Commission to promulgate a separate business opportunity rule. As an initial matter, several commenters observed that business opportunities and franchises are distinct business arrangements that pose very different regulatory challenges. For example, franchises typically are expensive and involve complex contractual licensing relationships, while business opportunity sales are often less costly, involving simple purchase agreements that pose less of a financial risk for purchasers. Also, in contrast to franchises, many business opportunity programs have no continuing relationship between the buyer and seller, but are a one time purchase of packaged information. Does this indeed explain the difference in fraud rates? Some Biz Op operators are completely miffed with the FTC and called them everything from; Liars to Traitors and even called them conspirators in bed with large Corporations. But is that criticism fair? After all the complaints and facts speak for themselves do they not? It appears that the reason why is the Federal Trade Commission is making a separate category for Biz Ops is to help the good operators and weed out the bad ones and separate Franchisors and Biz Ops because they are really so different. Consider all this in 2006. |
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