| Comment Number: | 522418-10361 |
| Received: | 7/16/2006 10:12:21 AM |
| Organization: | GMD GLOBAL |
| Commenter: | Garnett Damewood |
| State: | TX |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| Attachment: | 522418-10361.pdf Download Adobe Reader |
Comments:
To: Steven Toporoff , or Craig Tregillus , Division of Marketing Practices, Room 238, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580. Persuent to: section 18 of the FTC Act, 15 U.S.C. 57a et seq., and part 1, subpart B, of the Commission's Rules of Practice. 16 CFR 1.7, and 5 U.S.C. 551 et seq. This authority permits the Commission to promulgate, modify, and repeal trade regulation rules that define with specificity acts or practices that are unfair or deceptive in or affecting commerce within the meaning of section (5)(a)(1) of the FTC Act. 15 U.S.C. 45(a)(1). The FTC Regulation of Franchising and Business Opportunity Ventures In the 1970s, the Commission promulgated a trade regulation rule entitled ``Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures' (the ``Franchise Rule'') to address deceptive and unfair practices in the sale of franchises and business [[Page 19055]] opportunity ventures.\2\ Based upon the original rulemaking record, the Commission found that franchise and business opportunity fraud was widespread, causing serious economic harm to consumers. To prevent fraudulent practices in the sale of franchises and business opportunities, the Commission adopted a pre-sale disclosure rule. I, Garnett Damewood beleive this: Prospects would have to wait seven days after receiving disclosures before they could register. Suggestion: Eliminate the waiting period, at least for opportunities like Quixtar where a prospect can get his money back if not satisfied. You would be required to give every prospect a list of "references" – the names, addresses, and phone numbers of 10 other IBOs in the area – seven days before the prospect registers. Suggestion: Eliminate the requirement to provide 10 references. You would have to make a different disclosure for every income claim. Suggestion: Eliminate the requirement to disclose past litigation. You would be required to provide prospects with personal financial documents to back up ("substantiate") any income claim. Suggestion: If disclosures are needed, require a simple, standard, easily understood disclosure such as "average monthly gross income for 'active' IBOs." IBOs should possess substantiation for any claim but should not be required to disclose it except when required by the FTC and similar state agencies in an agency investigation. END OF COMMENT