| Comment Number: | 522418-07967 |
| Received: | 7/12/2006 4:37:30 AM |
| Organization: | Tada Enterprises |
| Commenter: | Esao, Cheryl & Brian Tada |
| State: | CA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
Dear Sir or Madam: We are writing to express our strong opposition to the proposed Business Opportunity Rule R511993. We understand the Federal Trade Commission must protect the public from "unfair and deceptive acts or practices," but the rule as proposed would make it very difficult for us to operate our business as Shaklee Independent Distributors. Furthermore, if this proposed rule is put into effect, it would have a tremendously dampening effect on the direct selling industry, causing a potential loss of countless millions of dollars in sales, resulting in a loss of tax revenue for the government. A confusing and burdensome section of the proposed rule is the seven-day waiting period to enroll new distributors. Most people who sign a Shaklee application are product consumers. If they later wish to build a business, all they must do is supply Shaklee Corporation with their SSN or Tax ID Number. No additional kit, fee or application is required. The Shaklee Member Kit costs only $19.95, far less than most consumer purchases, including TVs and appliances, none of which require a waiting period. The waiting period is also unnecessary in that Shaklee Corporation already has a 90% buyback policy for products, including the Member Kit, purchased by a distributor within the last two years. The proposed rule requires disclosure of at least 10 prior customers nearest to the prospective customer. In this day of identity theft, we are uncomfortable giving out personal information of other Shaklee distributors, without their knowledge or consent. We understand those signing up after the rule takes effect would be told in writing "If you buy a business opportunity from the seller, your contact information can be disclosed in the future to other buyers." This would dissuade new people from signing up as distributors due to identity theft and privacy issues. Providing 10 references also could damage Shaklee distributors’ businesses. Lower ranking distributors often are involved in more than one direct selling company. Providing a list to a potential recruit, who may already be a distributor for a competing direct selling company, may be an invitation to solicit existing distributors for such other opportunity. The “10 reference” requirement is an administrative nightmare. To obtain the list of 10 prior purchasers, we would need to provide Shaklee Corporation with a prospective distributor's address, and wait to receive the list of 10 nearest distributors who became distributors within the past three years. Each prospective recruit will need a customized disclosure statement, resulting in a delay far longer than seven calendar days before anyone can sign an application. Many people enter direct selling to earn extra income for a specific goal, such as holiday purchases or a family vacation. The delay which the proposed rule creates may make the goal unattainable. The proposed rule calls for release of any information regarding lawsuits that allege misrepresentation or unfair or deceptive practices over a 10-year period. It does not matter if the company was found innocent or not liable. It does not make sense to us that we would have to disclose these lawsuits unless Shaklee Corporation, or its officers, directors or sales department employees, had been found guilty or liable. Fifty-year old companies such as Shaklee would be at a disadvantage compared to start-up companies, which may not yet have experienced litigation but are far more likely to have legal issues surrounding their opportunities. The three of us have been Shaklee Distributors for over 25 years. Originally, we joined as Shaklee Distributors because of the tremendous results we received from the Company's nutritional products, and wanted to earn additional income working from home. Now our family depends upon this extra income to supplement our budget. Thank you for considering our comments. God bless you. Sincerely, Esao Tada Cheryl Tada Brian Tada