The Pampered Chef
350 S. Rohlwing Road - Addison, Illinois
June 25, 1997
Office of the Secretary
Re: Trade Regulation Rule on Disclosure Requirements and Prohibitions concerning Franchising and Business Opportunity Ventures, 16 CFR Part 436
We are writing this letter to strongly support the "Comments of The Direct Selling Association" dated April 30, 1997 regarding the above referenced subject.
The Pampered Chef is a direct selling company that sells high quality kitchen utensils through home party demonstrations. We are a member of the Direct Selling Association (DSA) with over 35,000 active Kitchen Consultants (independent contractors) nationwide.
As most of our consultants earn less than $5,000 per year through their Pampered Chef business, it gives them an opportunity to earn extra money for specific goals and/or to supplement their family income, and they can get their Pampered Chef business started with just a minimal investment. Our Kitchen Consultants have the independence and flexibility to work as much as they want.
In supporting the DSA's comments on the trade regulation rule on disclosure requirements and prohibitions concerning franchising and business opportunity ventures, we endorse the definition of a business opportunity as adopted by the State of Illinois, which addresses our industry's concerns about potential confusion between direct selling activities and business opportunities. Moreover, many other states have adopted a similar definition of business opportunity that provides consistency and uniformity for direct selling and other businesses seeking to determine whether the laws apply or not.
In addition, we also believe that the business opportunity definition should specify that payments are required. Where there is no required payment to participate in a marketing plan and where payments which are made are subject to bona fide refund, there is no need for the disclosure and other protections of the FTC proposed rule. Moreover, the business opportunity threshold should not be lowered. In fact, the current $500 threshold, established back in 1978, should be increased because of inflation, to $ 1,000 as suggested by the DSA.
Lastly, we would suggest that the FTC adopt an exclusion from the definition of business opportunity for all companies that provide for a buy back policy consistent with the DSA Code of Ethics and many state laws. This buy back/repurchase policy will provide a valuable assurance to direct sellers that the risks of their initial investments in the business are minimal.
We at The Pampered Chef appreciate your work in rule making and again reiterate our support for the DSA's position on these matters. Please don't hesitate to contact me if you have any question or concerns.
THE PAMPERED CHEF, LTD.