FEDERAL TRADE COMMISSION (FTC)
Your Rights Under Federal Law
According the the Federal Trade Commission, 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.
Have a complaint against a franchise or business opportunity company?
The FTC the does not resolve individual consumer or business problems. However, your complaint helps them investigate fraud, and can lead to law enforcement action.According to the FTC, if you’re having a problem with a franchise or business opportunity company, they want to hear from you. In addition to possibly providing assistance, the FTC says “consumer complaints help us identify companies and practices that affect a broad segment of the public, and are useful for law enforcement purposes.”
The FTC wants you to describe your complaint in writing. Explain what you think was misleading or deceptive in the company’s promotional materials, disclosure document or offering circular. If you want your letter kept confidential, please print the words, “Privileged and Confidential,” on the top of each page. Include your name, address, and a daytime telephone number where they can reach you. It will help if you can send them copies of any written claims in promotional materials or elsewhere that you believe are false. Send copies, not originals, of any documents you think we should have.
Please address your complaint to:
Consumer Response Center
Federal Trade Commission - Rm. 130
600 Pennsylvania Ave., NW
Washington, D.C. 20580.
You can fill out a consumer complaint form on the FTC website.
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