FTC FACTS for Business

FOR THE CONSUMER 1-877-FTC-HELP

ftc.gov FEDERAL TRADE COMMISSION

I f you sell business opportunities, take this opportunity to find out more about your compliance obligations. The Federal Trade Commission, the nation’s consumer protection 

agency, has revised the Business Opportunity Rule to make it easier for people to get the information 

they need when they’re thinking about buying a bizopp. What does that mean for your company? 

The Rule now covers a wider variety of business opportunities, so you might be covered even if you 

weren’t covered before. In addition, the Rule streamlines and simplifies the disclosures you have to 

give prospective buyers. 

What’s covered. The 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.

What’s required. If a transaction falls within the Rule, a seller has three key legal responsibilities:

1. You have to give the buyer a one-page Disclosure Document. And you have to provide this 

document seven days before the prospective buyer signs a contract or pays any money for the 

business opportunity.

Selling a Work-at-Home or 

Other Business Opportunity?

Revised Rule May Apply to You
Facts for Business 2

2. If you make an earnings claim, you 

have to give the prospective buyer a 

separate document that says across the 

top EARNINGS CLAIM STATEMENT 

REQUIRED BY LAW.

3. You have to comply with general truth-inadvertising principles, including avoiding 

deceptive practices. The Rule spells out a 

list of some “dos” and “don’ts.” 

The Disclosure Document

At least seven days before prospective buyers 

sign a contract or pay any money for a business 

opportunity, you have to give them a onepage Disclosure Document that lists five key 

pieces of information. To keep things simple 

for you and the buyer, you must use the 

standard form. It’s attached and it’s available at 

business.ftc.gov/businessopportunitydisclosure.

What do you have to disclose on that form?

•	 Identifying Information. You have to list 

your company’s name, business address, 

and phone number; the sales person’s name; 

and the date you gave the document to the 

prospective buyer. 

•	 Legal Actions. You have to disclose whether 

your company or certain key personnel have 

been the subject of civil or criminal actions 

involving misrepresentation, fraud, violation 

of the securities laws, or any unfair or 

deceptive practices – including violation of 

any FTC rule – within the past ten years. If 

the answer is yes, you have to attach a list of 

the actions to the Disclosure Document.

•	 Cancellation or Refund Policy. You have to 

check a box to say if you have a cancellation 

or refund policy. If you do, you have to 

attach to the Disclosure Document a statement 

describing your policy.

•	 Earnings. You have to check a box to say if 

you’ve stated – or implied – how much money 

a prospective buyer can earn. If you have, you 

must attach an Earnings Claim Statement to 

the Disclosure Document. 

•	 References. On the Disclosure Document, 

you have to list contact information for at 

least 10 people who have bought a business 

opportunity from your company. If more than 

10 people have bought a bizopp, you may 

list the 10 who live closest to the prospective 

buyer. If fewer than 10 people have bought 

the bizopp, you have to list everyone. Also, 

you have to update the list every month, until 

10 people have bought the bizopp. In addition, 

the Disclosure Document must say clearly 

and conspicuously: “If you buy a business 

opportunity from the seller, your contact 

information can be disclosed in the future to 

other buyers.”

A few more things about the Disclosure 

Document: The prospective buyer has to sign, 

date, and return the form to you. You have to 

make sure you’ve attached any other documents 

the Rule requires. You have to update the 

form every quarter. And if you promote your 

business opportunity in a language other than 

English, the one-page Disclosure Document 

– along with the required disclosures – must 

be in that language. The Spanish-language 

form is attached and it’s available at 

business.ftc.gov/businessopportunitydisclosure. 

Furthermore, if you tell a prospective buyer 

something in person, in an email, over the phone, or 

in any other ad or promotion, make sure it doesn’t 

contradict what you say in your written disclosures. 

It’s illegal to make contradictory oral and written 

statements – and it just creates confusion.
Facts for Business 3

The Earnings Claim Statement

If you make a claim expressly or by implication 

about how much money a person can earn from 

your business opportunity, you have to put the 

claim in writing. Furthermore, it’s illegal to 

make an earnings claim unless you have written 

materials on hand that back up what you’re 

saying. You have to make those materials 

available to a prospective buyer or to the FTC if 

they ask for them.

If you make an earnings claim, you have to give 

the prospective buyer a separate document that 

clearly says across the top EARNINGS CLAIM 

STATEMENT REQUIRED BY LAW. What has 

to be on that document?

•	 The name of the person making the claim and 

the date;

•	 The specifics of the claim;

•	 The start and end date those earnings were 

achieved;

•	 The number and percentage of your buyers 

who got at least that result;

•	 Any information about the buyers who got 

those results that might vary from prospective 

buyers – for example, where they’re located; 

and

•	 A statement that prospective buyers can get 

written proof for your earnings claims if they 

ask for it.

What about earnings claims made online, on TV 

or in newspapers, or in other media? The Rule is 

clear: You must have written proof on hand that 

supports your representations, and you have to 

disclose certain information when you’re making 

the claim – 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. What if you make general statements about 

earnings or talk about the performance statistics in 

the industry? You’ll need to have written proof on 

hand showing that the results for the opportunity 

you’re selling are at least as good. Read the Rule 

for the specifics.

What if the information you previously provided 

to a prospective buyer in the Earnings Claim 

Statement substantively changes? You have an 

obligation to let the prospective buyer know 

what those changes are, in writing, before the 

prospective buyer signs a contract or pays you 

any money. And like the Disclosure Document, 

if you promote your business opportunity in a 

language other than English, your Earnings Claim 

Statement has to be in that language, too.

Avoid Illegal Practices

The Rule puts down in black and white what’s 

always been the case: It’s illegal to engage in 

deceptive or unfair practices in the promotion, 

marketing, or sale of any business opportunity. 

For example, don’t say anything orally or in other 

paperwork that contradicts information in your 

one-page Disclosure Document or your Earnings 

Claim Statement.

The Rule lists other clear “dos” and “don’ts.” For 

example:

•	 Don’t include anything in your Disclosure 

Document or Earnings Claim Statement other 

than what the Rule specifically allows.

•	 Don’t mislead people about what other buyers 

have earned, what they might earn, or how 

much help you’ll give them. Remember: 

Under the law, it is illegal to deceive people 

expressly or by implication. Even if what 

you say is literally truthful, it still could be 

deceptive in context. For example, a claim can 

be misleading if relevant information is left 
Facts for Business 4

November 2011

To file a complaint or to get free information 

on consumer issues, visit www.ftc.gov or call 

toll-free, 1-877-FTC-HELP (1-877-382-4357); 

TTY: 1-866-653-4261. Watch a video, How to 

File a Complaint, at www.ftc.gov/video to learn 

more. The FTC enters consumer complaints 

into the Consumer Sentinel Network, a secure 

online database and investigative tool used by 

hundreds of civil and criminal law enforcement 

agencies in the U.S. and abroad. For free 

compliance resources, visit the Business Center, 

www.business.ftc.gov. 

Opportunity to Comment

The National Small Business Ombudsman and 

10 Regional Fairness Boards collect comments 

from small businesses about federal compliance 

and enforcement activities. Each year, the 

Ombudsman evaluates the conduct of these 

activities and rates each agency's responsiveness 

to small businesses. Small businesses can 

comment to the Ombudsman without fear 

of reprisal. To comment, call toll-free 

1-888-REGFAIR (1-888-734-3247) or go to 

www.sba.gov/ombudsman.

out or if the claim implies something that’s not 

true.

•	 Don’t tell people they’ll have exclusive 

territories if that’s not the case. Be truthful in 

explaining the likelihood of finding locations, 

outlets, or customers.

•	 If you hold someone out as a successful buyer 

of your business opportunity, you have to 

clearly disclose if you’ve paid them or have 

some other relationship to them.

•	 Don’t tell people you’re offering them a job 

if what you’re really doing is selling them a 

business. 

The Rule also requires you to keep certain records 

and make them available to the FTC for three 

years. Examples of what you need to keep: each 

buyer’s signed disclosure receipt, all executed 

written contracts, and substantiation supporting 

your earnings claims. Read the Rule for details 

on your record keeping obligations. The Rule 

generally exempts business opportunities that meet 

the definition of a “franchise,” but check the Rule 

to see if that applies to you.

The FTC works for the consumer to prevent 

fraudulent, deceptive, and unfair practices in 

the marketplace and to provide information to 

businesses to help them comply with the law. 
DISCLOSURE OF IMPORTANT INFORMATION ABOUT BUSINESS OPPORTUNITY 

Required by the Federal Trade Commission, Rule 16 C.F.R. Part 437 

Name of Seller: Address: 

Phone: Salesperson: Date: 

[Name of Seller] has completed this form, which provides important information about the business opportunity it 

is offering you. The Federal Trade Commission, an agency of the federal government, requires that [Name of 

Seller] complete this form and give it to you. However, the Federal Trade Commission has not seen this completed 

form or checked that the information is true. Make sure that this information is the same as what the 

salesperson told you about this opportunity.

LEGAL ACTIONS: Has [Name of Seller] or any of its key personnel been the subject of a civil or criminal 

action involving misrepresentation, fraud, securities law violation, or unfair or deceptive practices, including 

violations of any FTC Rule, within the past 10 years?

 YES  If the answer is yes, [Name of Seller] must attach a list of all such legal actions to this form.

 NO

CANCELLATION OR REFUND POLICY: Does [Name of Seller] offer a cancellation or refund policy?

 YES  If the answer is yes, [Name of Seller] must attach a statement describing this policy to this form.

 NO

EARNINGS: Has [Name of Seller] or its salesperson discussed how much money purchasers of this business 

opportunity can earn or have earned? In other words, have they stated or implied that purchasers can earn a 

specific level of sales, income, or profit?

 YES  If the answer is yes, [Name of Seller] must attach an Earnings Claims Statement to this form.

Read this statement carefully. You may wish to show this information to an advisor or 

accountant.

 NO

REFERENCES: In the section below, [Name of Seller] must provide you with contact information for at least 

10 people who have purchased a business opportunity from them. If fewer than 10 are listed, this is the total list 

of all purchasers. You may wish to contact the people below to compare their experiences with what 

[Name of Seller] told you about the business opportunity.

Note: If you purchase a business opportunity from [Name of Seller], your contact information can be disclosed 

in the future to other potential buyers. 

 Name State Telephone Number Name State Telephone Number

1. 6. 

2. 7. 

3. 8. 

4. 9. 

5. 10 

Signature: ___________________________________ Date: _______________ 

By signing above, you are acknowledging that you have received this form. This is not a purchase contract. To 

give you enough time to research this opportunity, the Federal Trade Commission requires that after you receive 

this form, [Name of Seller] must wait at least seven calendar days before asking you to sign a purchase contract or 

make any payments. 

For more information about business opportunities in general: Visit the FTC’s website at www.ftc.gov/bizopps

or call 1-877-FTC-HELP (877-382-4357). You can also contact your state’s Attorney General. 
DIVULGACIÓN DE INFORMACIÓN IMPORTANTE SOBRE OPORTUNIDAD DE NEGOCIO 

Formulario requerido por la Comisión Federal de Comercio (FTC) 

Regla 16 de la Parte 437 del Código de Regulaciones Federales 

Nombre del Vendedor: Domicilio: 

Teléfono: Representante de Ventas: Fecha: 

[Nombre del Vendedor] completó el presente formulario y en el mismo le suministra información importante sobre la oportunidad de 

negocio que le está ofreciendo. La Comisión Federal de Comercio (Federal Trade Commission, FTC), una agencia del gobierno 

federal, le requiere a la compañía [Nombre del Vendedor] que complete el presente formulario y que se lo entregue a usted. Pero la 

FTC no ha visto este formulario completado por la compañía ni ha verificado que la información indicada sea veraz. Asegúrese de 

que la información contenida en el presente formulario coincida con lo que le dijo el representante de ventas respecto de esta 

oportunidad.

ACCIONES LEGALES: ¿La compañía [Nombre del Vendedor] o alguno de los principales miembros de su personal ha sido sujeto 

de una acción civil o penal, que involucre falsedad, fraude, infracción de las leyes de títulos y valores, o prácticas desleales o 

engañosas, incluyendo infracciones de las Reglas o Normas de la FTC, dentro de los 10 últimos años?

 SI  Si la respuesta es afirmativa, [Nombre del Vendedor] debe adjuntar al formulario una lista completa de dichas 

acciones legales.

 NO

POLÍTICA DE CANCELACIÓN O REINTEGRO: ¿Ofrece [Nombre del Vendedor] una política de cancelación o reintegro?

 SÍ  Si la respuesta es afirmativa, [Nombre del Vendedor] debe adjuntar al formulario una declaración con la descripción de 

dicha política.

 NO

INGRESOS: ¿La compañía [Nombre del Vendedor] o alguno de sus representantes de ventas ha manifestado la cantidad de dinero 

que pueden ganar o que han ganado los compradores de esta oportunidad de negocio? ¿Dicho en otras palabras, han expresado de 

manera explícita o implícita que los compradores pueden alcanzar un nivel específico de ventas, o ganar un nivel específico de 

ingresos? 

 SÍ  Si la respuesta es afirmativa, [Nombre del Vendedor] debe adjuntar a este formulario una Declaración de los Ingresos 

Proclamados. Lea esta declaración atentamente. Puede que desee analizar esta información con un asesor o contador.

 NO

REFERENCIAS: En esta sección del formulario, [Nombre del Vendedor] debe listar la información de contacto de por lo menos 10 

personas que le hayan comprado una oportunidad de negocio. Si le suministran los datos de menos de 10 personas, es porque ésa es

la lista completa de todos los compradores. Puede que desee comunicarse con las personas listadas a continuación para 

comparar sus respectivas experiencias con lo que le dijo [Nombre del Vendedor] sobre la oportunidad de negocio que le está 

ofreciendo.

Nota: Si usted compra una oportunidad de negocio de [Nombre del Vendedor], podrá divulgarse su información de contacto a otros 

posibles compradores. 

Nombre Estado Número de Teléfono Nombre Estado Número de Teléfono

1. 6. 

2. 7. 

3. 8. 

4. 9. 

5. 10. 

Firma: ___________________________________ Fecha: _______________ 

Por medio de su firma, usted acusa recibo del presente formulario. Esto no es un contrato de compra. La Comisión Federal de 

Comercio (FTC) establece que con el fin de concederle el tiempo necesario para que usted investigue esta oportunidad, [Nombre del

Vendedor] debe esperar un mínimo de siete días naturales o corridos a partir de la fecha en que le entregue este formulario antes de 

pedirle que firme un contrato de compra o que efectúe un pago. 

Para más información sobre oportunidades de negocio en general: Visite el sitio Web de la FTC www.ftc.gov/bizopps o llame al 

1-877-FTC-HELP (877-382-4357). Usted también puede establecer contacto con el Fiscal General de su estado de residencia.