By Rod Davis, CEO BBB serving Southeast Florida and the Caribbean

As a result of COVID and job uncertainty, many Floridians began to explore other ways to earn a living.  While some opportunities may be worth pursuing, others may be set up to help someone else pad his or her retirement at your expense.  The Federal Trade Commission, recognizing that business opportunities can be made to look appealing, and are often presented to individuals with significant financial backing, put in place some requirements to help you determine if the business opportunity is a viable opportunity to earn a living. 

Before you begin to explore new opportunities, I hope you will first do a self-assessment of yourself.  Not everyone possesses the skills or characteristics to be an effective entrepreneur.  There are tools to help you assess your strengths and weaknesses, but a good hard look in the mirror and some reflection on what you do well and areas where you have struggled will help you determine if you have what it takes to run your own business. 

Some of the key traits shared by successful entrepreneurs are:

•       Disciplined
•       Process Oriented
•       Organizational Skills
•       Self-motivated
•       Resilient
•       Effective Communicator
•       Confident
•       Innovative

There are many other traits that could be listed, but if you can’t affirm that you possess the right mix of skills to develop and manage a strong business plan, then being your own boss might not be your best option for success. 

If you are considering business opportunities, it is wise to devote the time, resources and use an objective mindset to review any options you are seriously considering.  So, what is the Business Opportunity Rule and what does it cover? 

The FTC Business Opportunity Rule applies to commercial arrangements where a seller solicits a prospective buyer to enter into a new business, the prospective purchaser makes a required payment, and the seller – expressly or by implication – makes certain kinds of claims. Examples of what’s covered by the Rule include work-at-home opportunities like envelope stuffing or craft assembly where the seller offers to buy back merchandise from the bizopp buyer. Also covered: opportunities where a seller says it will help the buyer set up or run the business – for example, by providing the buyer with customers, accounts, or locations to sell products or services. Consult the Rule to find out if the opportunity you’re selling is within the definition.

The full text of the FTC Rule is on the FTC website at:  https://bit.ly/3fo4lKK

The FTC Rule helps you evaluate any business opportunity by requiring the seller to comply with three legal requirements. 

1. The seller must give the buyer a one-page Disclosure Document seven days before a prospective buyer signs a contract or pays any money for the business opportunity.
2. If the seller makes an earnings claim, the prospective buyer must receive a separate document that says across the top EARNINGS CLAIM STATEMENT REQUIRED BY LAW.
3. The seller must also comply with general truth-in-advertising principles, including avoiding deceptive practices. The Rule spells out a list of some “dos” and “don’ts.”

The Disclosure Document is intended to provide a potential buyer with key information to effectively evaluate the business opportunity.  Some of the information included in that document is: 

•       The name, address, phone number for the business along with the name of the salesperson
•       A disclosure about any legal issues relevant to the business or business principles
•       The cancellation or refund policy
•       If any earnings have been implied or stated, an earnings claim statement as outlined in the rule must be attached
•       References to enable a prospective buyer to obtain feedback from at least 10 other individuals (fewer is acceptable only if they list all that have been sold)

Equally as important as the Disclosure Document is the Earnings Claim Document if any claims have been made.  The FTC Rule also requires that claims be substantiated so that a potential buyer can determine what he or she will likely earn.  Specifically, the statement must include written proof of any representations, and disclose certain information when a claim is made – for example, the start and end dates the earnings were achieved and the number and percentage of your buyers who got at least that result.  The FTC Rule provides much more detail and it is essential that any business opportunity to be fully evaluated to determine if it is a good option for you. 

While the FTC provides some protection, ultimately, it is up to you to determine if a business opportunity is something you are willing to explore.  Make sure you have the right stuff to make it work as a business owner.  Be honest with yourself.  Then, fully explore various options using solid information and data to find the opportunity that motivates you and has the potential to be successful.