| Comment Number: | 522418-08864 |
| Received: | 7/13/2006 4:00:33 PM |
| Organization: | The LRH Company |
| Commenter: | Thomas Hinton |
| State: | VA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
RE: Business Oppty Rule R511993 I urge you NOT to imiplement the proposed rule regarding changes in disclosure requirements for business opportunities; or to signficantly amend it. Though all are concerned about protecting the public from unscrupulous practices, the Rule will cause great harm to my small family-owned business. 1) Though understandable when a potential investor is considering a larger investment of capital, the "seven day waiting period" rule is not necessary to protect purchasers of business opportunities of minimal investment (under $300 to $500). To participate in our business opportunity requires only $35.00 - hardly a big risk. The waiting period will raise unnecessary suspicion among perspective purchasers, and will create significant inconvenience for those of us who - like most businesses - conduct business on the road or remotely. 2) The requirement to provide a "list of nearest references" with names, addresses, and phone numbers presents confidentiality and privacy concerns, to be sure, but also places a tremendous burden on our small operation to logistically determine the closest referrence to each prospect. Each new business associate will have to agree to allow their contact information to be shared indiscriminately to any future prospect in their geographic area. This information will have to be given to anyone who even expresses interest in the product or opportunity, including competitors, which further damages our business, allowing our competitors to benefit from our advertising and marketing efforts. This requirement can be easily avoided by fraudulent businesses, do little to prevent fraud, and burden our small business unecessarily. 3) The earnings claim statement proposal is far too broad, and the required substantiation formula far too complicated for small business to comply with. 4) The proposed rule regarding disclosure of "all legal actions" does not discern whether the legal actions were substantiated in legal proceedings. This is fundamentally contrary to our Constitutional system. 5) The foundation of our business is a functional health beverage. People who enroll in our opportunity often do so only for the consumption of the product. Frequently, once a particular health condition is addressed to the enrollee's satisfaction, they no longer feel the need to participate, and cancel their enrollment. Thus those who have "cancelled" would not in any way accurately describe any satisfaction as to the business opportunity. In addition, people withdraw from business opportunities for numerous reasons, including finding other enterprises, interests, health, family circumstances, etc. This makes such a disclosure completely without merit when it comes to truly ascertaining the value of a business opportunity. (Just because a McDonald's franchisee decides to get out of the fast food business doesn't indicate that the franchise itself is flawed in any way.) In summary: the proposed rule will have a devasting effect on our small home business, potentially curtailing our ability to make our investment of time and money pay off. If the Government wants additional requirements for frachisers and business opportunity companies, at least limit the rule to those companies that propose significantly greater financial risk than those of us who are just the little guys. To not do so is to dis-incentivise a business model (like ours) that does not require large investment, thus increasing the public's risk over time. Sincerely, Thomas A Hinton President The LRH Company