Thinking of Buying a Business Opportunity?

Your Rights Under Federal Law

You are entitled to written disclosures from sellers of business opportunities whose initial costs totals $500 or more. Examples may include vending machines (e.g. soda or snack), electronic terminals (e.g. for Internet access, bill payment, obtaining cash, or changing coins), display racks (e.g., jewelry, cigars, or greeting cards), and other business opportunities. These disclosures, required by the FTC’s Franchise & Business Opportunity Rule must include the following information to help you check out the opportunity:

• The names, addresses, and telephone numbers of at least 10 prior purchasers who are the nearest to you (so you can arrange to visit them and check out the opportunity in person).
  
• The number and percent of prior purchasers who have made as much or more sales, income, or profits as the seller claims you can make (so you can tell how likely it is that you will do that well).
  
• An explanation of how the seller knows how much prior purchasers have made, and how any claims about sales, profits or earnings have been calculated (so you can tell whether the basis for the claim is reasonable).

In addition, if a newspaper classified ad for these type of business opportunities makes any claim that states or suggests how much money you could make, the Rule requires that the advertiser disclose in the ad the number and percent of prior purchasers who have made as much or more than the amount claimed.

If a seller of business opportunities costing $500 or more does not make these disclosure, it is violating federal law.