{"id":4960,"date":"2017-06-25T23:25:07","date_gmt":"2017-06-25T23:25:07","guid":{"rendered":"https:\/\/www.ftcguardian.com\/articles\/?p=4960"},"modified":"2017-06-25T23:25:07","modified_gmt":"2017-06-25T23:25:07","slug":"how-to-avoid-ftc-biz-op-regulation","status":"publish","type":"post","link":"https:\/\/www.ftcguardian.com\/articles\/how-to-avoid-ftc-biz-op-regulation\/","title":{"rendered":"How To Avoid FTC Biz Op Regulation"},"content":{"rendered":"<h1>How To Avoid FTC Biz Op Regulation<\/h1>\n<p>By Chip Cooper, ESQ<\/p>\n<p>Effective on March 1, 2012, the FTC\u2019s new Business Opportunity Rule (New Biz Op Rule) became effective.<\/p>\n<p>The Biz Op Rule applies to a specific type of offer defined as a \u201cBusiness Opportunity\u201d (Biz Op).<\/p>\n<p>The FTC\u2019s objective with the New Biz Op rule was to make it very tough to make legally compliant Biz Op offers, particularly Biz Op offers that make earnings claims.<\/p>\n<p>Because the New Biz Op Rule imposes numerous, detailed requirements, Internet marketers and online entrepreneurs should not offer Biz Ops.\u00a0 Even with careful attention to all the requirements, it would still be relatively easy to inadvertently cross the line into non-compliance, and therefor huge exposure to liability.\u00a0 In a nutshell, offering Biz Ops is a very high risk activity that should be avoided altogether.<\/p>\n<p><a class=\"popup_SDLM\" data-toggle=\"modal\" data-target=\"#popup_SDLM_modal\" href=\"#\"><img decoding=\"async\" src=\"\/images\/button_banner-SDLM.png\" alt=\"\" \/><\/a><\/p>\n<p><strong>Biz Op Defined<\/strong><\/p>\n<p>The New Biz Op Rule stipulates three elements that must be satisfied for an offer to be a Biz OP.<\/p>\n<ol>\n<li>Solicitation For New Business Opportunity &#8211; a seller solicits a prospective purchaser to enter into a \u201cnew business\u201d (i.e. a new line or type of business that the prospect is not currently engaged in);<\/li>\n<li>\u201cRequired Payment\u201d By Prospect \u2013 the prospect makes a payment, meaning all consideration paid by the prospect to the seller or an affiliate for the right to obtain or commence the operation of the business opportunity;<\/li>\n<li>Business Assistance \u2013 the seller (or someone recommended by the seller) provides any of the following types of assistance:\n<ul>\n<li>Locations for the use or operation of equipment or other devices paid for by the prospect;<\/li>\n<li>Outlets, accounts, or customers; or<\/li>\n<li>Buy back promises for goods or services provided by the prospect.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<p><strong>How To Avoid Biz Op Regulation<\/strong><\/p>\n<p>The way to avoid regulation as a Biz Op is to not satisfy one of the three elements of a Biz Op under the New Biz Op Rule.\u00a0 Remember, all three elements must be satisfied for a Biz Op to exist, so if you satisfy any two elements, but not three, you\u2019ve avoided Biz Op regulation.<\/p>\n<p>So, one way to avoid Biz Op regulation is to offer only educational and training services, and not offer a \u201cnew business\u201d.\u00a0 The FTC stated specifically that \u201cgeneral business advice and training\u201d services are not included in the Biz OP definition.\u00a0 However, some of the typical offers by Internet marketers and online marketers may come close<\/p>\n<p>to crossing over from education and training to operation of a \u201cnew business\u201d.<\/p>\n<p>However, if you analyze the three Biz Op elements, elements 1 and 2 may be satisfied by some offers typically made by Internet marketers and online entrepreneurs.\u00a0 With many offers there are \u201cgrey areas\u201d with elements 1 and 2, where there\u2019s no way to determine with confidence whether you\u2019ve satisfied the element or not.<\/p>\n<ul>\n<li>For example, the \u201cnew business\u201d requirement of Element 1 does not mean a person who has never been in business. The \u201cnew business\u201d could be satisfied by an offer to an experienced business person if the offer presents a new line of business to the prospect.\u00a0 Sellers generally have no way of knowing the present business status of prospects.<\/li>\n<li>Another example: The \u201crequired payment\u201d requirement of Element 2 may be satisfied by indirect payments through a third party.\u00a0 Even if\u00a0 you split a product into a free part and paid part, you\u2019ll still satisfy the \u201crequired payment\u201d requirement if the paid part is a \u201cpractical necessity\u201d for obtaining or operating the business opportunity.<\/li>\n<\/ul>\n<p>So, due to the relative uncertainty regarding elements 1 and 2, the recommended approach is to focus on not satisfying element 3, thereby avoiding Biz Op regulation.<\/p>\n<p><strong>Avoiding Element 3<\/strong><\/p>\n<p>Element 3 should be your primary focus in avoiding Biz Op regulation.<\/p>\n<p>The key is to avoid providing business assistance by not offering to provide locations (this applies primarily to offline businesses), outlets, accounts, customers, or buy back promises.<\/p>\n<p><a href=\"http:\/\/go.ftcguardian.com\/bw4uoy\"><img decoding=\"async\" src=\"https:\/\/s3.amazonaws.com\/ftcguardian\/images\/728x90-Un-vjy-FTC-GUARDIAN-banner-2.gif\" \/><\/a><\/p>\n<p>Remember, providing \u201cgeneral business advice and training\u201d services is OK, but the prospect must be solely responsible for finding his\/her own customers or other ways to monetize the purchase.<\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>Offering Biz Ops is a very high risk activity that should be avoided altogether.<\/p>\n<p>To avoid Biz Op regulation with confidence, understand the definition of Biz Op under the New Biz Op Rule, and be sure that you\u2019ve not satisfied at least one of its three elements.<\/p>\n<h2>Here\u2019s How To Make Sure You,\u00a0Your Business & Website Is FTC Compliant<\/h2>\n<p>By now it should be clear how important it is for you to be FTC compliant. But how can you do that without spending $7,500-$8,000 or more on Internet Attorneys?<\/p>\n<p>Smart business owners around the world are doing it with the help ofFTC Guardian.<\/p>\n<p>FTC Guardian is a service that is 100% focused on helping to keep you get and stay FTC compliant and fully protected. <a href=\"https:\/\/go.ftcguardian.com\/bw4uoy\" target=\"_blank\" rel=\"noopener noreferrer\">And right now, we are offering a free training to give you the knowledge, information, and guidance that you need to stay out of trouble with the Federal Trade Commission.<\/a><\/p>\n<p>The training is titled: <a href=\"https:\/\/go.ftcguardian.com\/bw4uoy\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>3 Tragic (Legal) Privacy Policy List Building Mistakes That Can Get You In Hot Water With The FTC Today \u2013 Resulting In Your Business Being Shut Down\u2026 And How To Solve It!<\/strong><\/a><\/p>\n<p>Here are some of the things you\u2019ll discover on the training:<\/p>\n<ul>\n<li>Real-Life Examples of People Who Didn\u2019t Think They Were At Risk, But Who Got Nailed By The FTC, And Why It Could Happen To You, Too<\/li>\n<\/ul>\n<ul>\n<li>The 3 Enormous Powers The FTC Has That Can Change Your Life \u2013 And Your Family\u2019s Life \u2013 Forever!<\/li>\n<\/ul>\n<ul>\n<li>How to Avoid FTC Claims When Collecting Leads With Optin Forms<\/li>\n<\/ul>\n<ul>\n<li>3 Privacy Policy Mistakes Every Digital Marketer Is Making, And Why You\u2019re In The FTC\u00a0Crosshairs.<\/li>\n<\/ul>\n<ul>\n<li>And Much More\u2026<\/li>\n<\/ul>\n<p><b>Remember: legal protection is a massively important part of your business, and it\u2019s one you cannot afford to ignore any longer.<\/b><\/p>\n<p><a href=\"https:\/\/go.ftcguardian.com\/bw4uoy\" target=\"_blank\" rel=\"noopener noreferrer\">Go here to register for our next FREE training and make your business is FTC compliant today!<\/a><\/p>\n<p><b>Disclaimer: \u00a0This article is provided for informational purposes only. It\u2019s not legal advice, and no attorney-client relationship is created. Neither the author nor FTC Guardian, Inc. is endorsed by the Federal Trade Commission.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"<p>How To Avoid FTC Biz Op Regulation By Chip Cooper, ESQ Effective on March 1, 2012, the FTC\u2019s new Business Opportunity Rule (New Biz Op Rule) became effective. The Biz Op Rule applies to a specific type of offer defined &hellip;  <\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_analytify_skip_tracking":false,"footnotes":""},"categories":[6,12],"tags":[40,28,15],"class_list":["post-4960","post","type-post","status-publish","format-standard","hentry","category-biz-op","category-ftc-compliance","tag-biz-op","tag-federal-trade-commission","tag-ftc-compliance"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/posts\/4960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/comments?post=4960"}],"version-history":[{"count":2,"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/posts\/4960\/revisions"}],"predecessor-version":[{"id":5080,"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/posts\/4960\/revisions\/5080"}],"wp:attachment":[{"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/media?parent=4960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/categories?post=4960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ftcguardian.com\/articles\/wp-json\/wp\/v2\/tags?post=4960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}