| Comment Number: | 522418-03215 |
| Received: | 6/18/2006 11:13:03 AM |
| Organization: | Young Living Essential Oils |
| Commenter: | Ron D'Angelo |
| State: | WI |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
Re: Business Opportunity Rule R511993 The proposed rule, “R511993” could prevent me from continuing as a distributor for Young Living Essential Oils. There are sections in the proposed rule that will make it difficult, if not impossible, for me to sell Young Living's products. Like myself, the vast majority of Young Living distributors promote the purchase of product rather than any business opportunity. Seven-Day Waiting Period - One of the most confusing sections of the rule is the seven-day waiting period to enroll new distributors. Young Living's Starter Kits cost $50.00, and contains products, samples, training materials worth more than the sale price. When a Starter Kit is purchased, the purchaser becomes a distributor and is granted special discounted pricing. No commissions or other compensation is paid on these kits, the company just covers its production costs. The waiting period gives the impression that there might be something wrong with the company or the compensation plan. Litigation Information -The rule also calls for the release of information regarding lawsuits involving misrepresentation or unfair or deceptive practices, regardless of whether the company was found innocent. It does not make sense to me that I have to disclose these lawsuits unless Young Living were found guilty. Otherwise, this company and I are put at an unfair disadvantage even though the company has done nothing wrong. To release this information would be misleading to prospective distributors. References- The rule requires the disclosure of a minimum of ten prior purchasers nearest to the prospective purchaser. In this day of identity theft, I am very uncomfortable giving out the personal information of individuals, particularly without their approval, to strangers. I also think the following sentence required by the proposed rule will prevent many people from wanting to sign up as a distributor: “If you buy a business opportunity from the seller, your contact information can be disclosed in the future to other buyers.” People will be reluctant to share their personal information with individuals they may have never met. Further, Young Living simply does not sell “business opportunities” in this fashion. Cancellation- Some people decide to stop purchasing from Young Living after a period of time or purchase very sporadically and lose their distributor status. As with any large business, this amounts to tens of thousands of individual customers who no longer order from them each year. Maintaining such lists and providing them to every potential distributor and wholesale customer would be an unrealistic burden. Exemption -For about 25 years the FTC's Franchise Rule included only those opportunities that required a buyer to make a payment of at least $500 within the first six months of operation. Any buyer making payments of less than $500 within the first six months was exempt from further requirements. The April 12, 2006, proposed rule eliminates this $500 exemption! In 1979, to justify the reasonable $500 exemption, the FTC wisely said: “When the required investment to purchase a business opportunity is comparatively small, prospective purchasers face a relatively small financial risk.” This is still true today. This exemption is necessary because without such an exemption, the proposed rule places an unreasonable burden on tens of thousands of Young Living distributors, like myself, and on millions of direct selling and network marketing distributors throughout the US. This would be devastating to the growth of my business and that of millions of Americans. I believe that the proposed application of this rule to my business constitutes an unjustified overreaching. Please reinstate at least a $500 exemption. I appreciate the work that the FTC does to protect consumers, yet I believe this proposed new rule has many unintended consequences, and there are less burdensome alternatives available to achieving your goals.