Business Opportunities · Buying a Business

State Disclosure Requirements for Business Opportunities

BUYING A BUSINESS

Are you buying a business opportunity package? Are you wondering where to look to find out a little bit more about state disclosure requirements?

Before looking any further, it will be important to understand a few things about the current legal status of business opportunity packages and transactions in the United States.

Indeed, the funny thing about the term "business opportunity" is that it's very often a bit of a chore to define what, exactly, this term means. Despite the four basic tenets that the federal government gives as a guideline as to what must occur in the process of a business opportunity transaction, the different states' disclosure requirements differ greatly.

So, to briefly review what the Federal Trade Commission (FTC) has outlined as the definition of a business opportunity, it can be seen right away that these guidelines involve a general list of requirements for compliance with their established model. They stipulate that a transaction of five hundred dollars take place, that the purchaser of the package markets and otherwise makes use of the business opportunity according to a predetermined plan, that the entirety of the transactions be completed in writing and an established place or account for the new business opportunity venture to anchor itself to.

But let's face the facts by asking a simple question: how useful are these rules anyway?

The truth is that, due to their inherent vagueness, more than half of the states in the nation have had to establish specific rules in order to regulate this phenomenon. That's because only a very small portion of the business opportunities that actually fell under this Federal Trade Commission (FTC) definition.

Therefore, as mentioned previously, many states have had to pick up the slack by placing further specifications and disclosure requirements that govern the sale and operation of business opportunity ventures. Essentially, this extra legal buffer benefits you, the entrepreneur who interested in buying up the business opportunity package.

That's because there is a great advantage to being able to know whether or not the individual or entity that is attempting to sell you a business opportunity package actually wants to conduct business legitimately or just rip you off. In most of the states, it is required that every business opportunity vendor file with the state government before doing business.

To find out if the state that you are doing business in has disclosure requirements, refer to the list below. The states which require that business opportunity packages or marketing plans that are assisted by the seller have a certain level of disclosure tend to ask that business opportunity sales operation and their vendors file their operations with the state government.

This means, simply that the state can keep tabs on the operations that file with them. Of course, many independent sellers of business opportunities tend to avoid state regulations, even in regulation states. That's why each state government makes a point to warn against potential fraud.

Regulation states that require filing include:

• California
• Florida
• Connecticut
• Illinois
• Iowa
• Indiana
• Kentucky
• Maryland
• Maine
• Nebraska
• Minnesota
• North Carolina
• New Hampshire
• South Carolina
• Oklahoma
• Texas
• South Dakota
• Washington
• Utah

On the other hand, there are also a handful of states among the regulation states that do not require filing. These states include

• Georgia
• Ohio
• Virginia

In Michigan it is necessary for business opportunity package vendors to post a notice and in Louisiana it is required that a bond be filed for a business opportunity package seller. This bond covers a certain amount of liability that the business opportunity seller to be accountable for should he or she engage in any practice which harms the investment of the entrepreneur or entrepreneurs who buy up the package.