[Federal Register Volume 73, Number 197 (Thursday, October 9, 2008)]
[Notices]
[Pages 59629-59631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-24021]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; Comment Request; Extension

AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management and Budget (``OMB'') for 
review, as required by the Paperwork Reduction Act (``PRA''). The FTC 
is seeking public comments on its proposal to extend through October 
31, 2011, the current PRA clearance for information collection 
requirements contained in the Commission's Business Opportunity Rule 
(``Rule''). The current clearance expires on October 31, 2008.

DATES: Comments must be submitted on or before November 10, 2008.

[[Page 59630]]


ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``16 CFR Part 
437: Paperwork Comment, FTC File No. P024404'' to facilitate the 
organization of comments. Please note that comments will be placed on 
the public record of this proceeding--including on the publicly 
accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm) 
-- and therefore should not include any sensitive or confidential 
information. In particular, comments should not include any sensitive 
personal information, such as an individual's Social Security Number; 
date of birth; driver's license number or other state identification 
number, or foreign country equivalent; passport number; financial 
account number; or credit or debit card number. Comments also should 
not include any sensitive health information, such as medical records 
or other individually identifiable health information. In addition, 
comments should not include any ``[t]rade secrets and commercial or 
financial information obtained from a person and privileged or 
confidential. . . .,'' as provided in Section 6(f) of the FTC Act, 15 
U.S.C. 46(f), and Commission Rule 4.10(a)(2), 16 CFR 4.10(a)(2). 
Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c).\1\
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    \1\ FTC Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
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    Because paper mail addressed to the FTC is subject to delay due to 
heightened security screening, please consider submitting your comments 
in electronic form. Comments filed in electronic form should be 
submitted by using the following weblink: (http://secure.commentworks.com/ftc-bizopPRA) (and following the instructions 
on the web-based form). To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at the 
weblink (http://secure.commentworks.com/ftc-bizopPRA) If this Notice 
appears at (http://www.regulations.gov/search/index.jsp), you may also 
file an electronic comment through that website. The Commission will 
consider all comments that regulations.gov forwards to it. You may also 
visit the FTC website at http://www.ftc.gov to read the Notice and the 
news release describing it.
    A comment filed in paper form should include the ``16 CFR Part 437: 
Paperwork Comment, FTC File No. P024404'' reference both in the text 
and on the envelope, and should be mailed or delivered to the following 
address: Federal Trade Commission, Office of the Secretary, Room H-135 
(Annex J), 600 Pennsylvania Avenue, NW, Washington, DC 20580. The FTC 
is requesting that any comment filed in paper form be sent by courier 
or overnight service, if possible, because U.S. postal mail in the 
Washington area and at the Commission is subject to delay due to 
heightened security precautions.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
public comments that it receives, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC 
website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the Commission makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.shtm).
    All comments should additionally be submitted to: Office of 
Management and Budget, Attention: Desk Officer for the Federal Trade 
Commission. Comments should be submitted via facsimile to (202) 395-
6974 because U.S. Postal Mail is subject to lengthy delays due to 
heightened security precautions.

FOR FURTHER INFORMATION CONTACT: Karen Hobbs, Attorney, Division of 
Marketing Practices, Bureau of Consumer Protection, (202) 326-3587, 
Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington 
D.C. 20580.

SUPPLEMENTARY INFORMATION: On July 7, 2008, the FTC sought comment on 
the information collection requirements associated with the Business 
Opportunity Rule, 16 CFR Part 437 (Control Number: 3084-0142).\2\ No 
comments were received. Pursuant to the OMB regulations, 5 CFR Part 
1320, that implement the PRA, 44 U.S.C. 3501-3521, the FTC is providing 
this second opportunity for public comment while seeking OMB approval 
to extend the existing paperwork clearance for the Rule. All comments 
should be filed as prescribed in the ADDRESSES section above, and must 
be received on or before November 10, 2008.
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    \2\ 73 FR 38451 (July 7, 2008).
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    The Rule is designed to ensure that prospective purchasers of a 
business opportunity receive information that will help them evaluate 
the opportunity that is presented to them. Part 437 was promulgated in 
March of 2007, concurrently with the amendment of the Franchise Rule, 
Part 436. Part 437 mirrors the requirements and prohibitions of the 
original Franchise Rule, and imposes no additional disclosure or 
recordkeeping obligations or prohibitions.\3\ The Rule requires 
business opportunity sellers to furnish to prospective purchasers a 
disclosure document that provides information relating to the seller, 
the seller's business, the nature of the proposed business opportunity, 
as well as additional information regarding any claims about actual or 
potential sales, income, or profits for a prospective business 
opportunity purchaser. The seller must also preserve information that 
forms a reasonable basis for such claims. These requirements are 
subject to the PRA. The FTC is seeking to extend the current PRA 
clearance to October 31, 2011.\4\
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    \3\ In March of 2008, the Commission published the Business 
Opportunity Rule Revised Notice of Proposed Rulemaking, 73 FR 16110 
(March 26, 2008) (``Notice''). The Notice proposed amending the 
Business Opportunity Rule substantially, and would, among other 
things, reduce the number of required disclosures by sellers of 
business opportunities to prospective purchasers. Conversely, the 
Notice proposed amending the rule to expand the coverage of entities 
required to make disclosures to include a broader array of business 
opportunities than those covered by the original Franchise Rule. For 
now, however, only those businesses opportunities covered by the 
original Franchise Rule--such as vending machine and rack display 
opportunities--remain covered under part 437.
    \4\ The current clearance under recently assigned OMB Control 
Number 3084-0142 covers the terms of the original Franchise Rule as 
applied to business opportunity sellers. The portion of clearance 
applicable to franchisors under Part 436 is separately assigned to 
pre-existing OMB Control Number 3084-0107.
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Estimated annual hours burden: 16,750 hours

    Based on a review of trade publications and information from state 
regulatory authorities, staff believes that, on average, from year to 
year, there are approximately 2,500 business opportunity sellers, with 
perhaps about 10% of that total reflecting an equal amount of new and 
departing business entrants.

[[Page 59631]]

    The burden estimates for compliance will vary depending on the 
particular business opportunity seller's prior experience with the 
original Franchise Rule. Staff estimates that 250 or so new business 
opportunity sellers will enter the market each year, requiring 
approximately 30 hours each to develop a Rule-compliant disclosure 
document. Thus, staff estimates that the cumulative annual disclosure 
burden for new business opportunity sellers will be approximately 7,500 
hours. Staff further estimates that the remaining 2,250 established 
business opportunity sellers will require no more than approximately 3 
hours each to update their disclosure document. Accordingly, the 
cumulative estimated annual disclosure burden for established business 
opportunity sellers will be approximately 6,750 hours.
    Business opportunity sellers may need to maintain additional 
documentation for the sale of business opportunities in states not 
currently requiring these records as part of their regulation of 
business opportunity sellers. This might entail an additional hour of 
recordkeeping per year. Accordingly, staff estimates that business 
opportunity sellers will cumulatively incur approximately 2,500 hours 
of recordkeeping burden per year (2,500 business opportunity sellers x 
1 hour).
    Thus, the total burden for business opportunity sellers is 
approximately 16,750 hours (7,500 hours of disclosure burden for new 
business opportunity sellers + 6,750 hours of disclosure burden for 
established business opportunity sellers + 2,500 of recordkeeping 
burden for all business opportunity sellers).

Estimated annual labor cost: $3,595,000

    Labor costs are determined by applying applicable wage rates to 
associated burden hours. Staff presumes an attorney will prepare or 
update the disclosure document at an estimated $250 per hour. As 
applied, this would yield approximately $3,562,500 in labor costs 
attributable to compliance with the Rule's disclosure requirements 
((250 new business opportunity sellers x $250 per hour x 30 hours per 
seller) + (2,250 established business opportunity sellers x $250 per 
hour x 3 hours per seller)).
    Staff anticipates that recordkeeping would be performed by clerical 
staff at approximately $13 per hour. At 2,500 hours per year for all 
affected business opportunity sellers (see above), this amounts to an 
estimated $32,500 of recordkeeping cost. Thus, the combined labor costs 
for recordkeeping and disclosure for business opportunity sellers is 
approximately $3,595,000.

Estimated non-labor cost: $3,887,500

    Business opportunity sellers must also incur costs to print and 
distribute the disclosure document. These costs vary based upon the 
length of the disclosures and the number of copies produced to meet the 
expected demand. Staff estimates that 2,500 business opportunity 
sellers print and mail 100 documents per year at a cost of $15 per 
document, for a total cost of $3,750,000 (2,500 business opportunity 
sellers x 100 documents per year x $15 per document).
    Business opportunity sellers must also complete and disseminate an 
FTC-required cover sheet that identifies the business opportunity 
seller, the date the document is issued, a table of contents, and a 
notice that tracks the language specifically provided in the Rule. 
Although some of the language in the cover sheet is supplied by the 
government for the purpose of disclosure to the public, and is thus 
excluded from the definition of ``collection of information'' under the 
PRA, see 5 CFR 1320.3(c)(2), there are residual costs to print and mail 
these cover sheets, including within them the presentation of related 
information beyond the supplied text. Staff estimates that 2,500 
business opportunity sellers complete and disseminate 100 cover sheets 
per year at a cost of approximately $0.55 per cover sheet, or a total 
cost of approximately $137,500 (2,500 business opportunity sellers x 
100 cover sheets per year x $0.55 per cover sheet).
    Accordingly, the cumulative non-labor cost incurred by business 
opportunity sellers each year attributable to compliance will be 
approximately $3,887,500 ($3,750,000 for printing and mailing documents 
+ $137,500 for completing and mailing cover sheets).

William Blumenthal
General Counsel
[FR Doc. E8-24021 Filed 10-8-08: 8:45 am]
[BILLING CODE 6750-01-S