2023 Texas Statutes › Business and Commerce Code › Title 4 - Business Opportunities and Agreements › Chapter 51 - Business Opportunities › Subchapter A. General Provisions › Section 51.003. Definition of Business Opportunity

Sec. 51.003.  DEFINITION OF BUSINESS OPPORTUNITY.  (a)  In this chapter, "business opportunity" means a sale or lease for an initial consideration of more than $500 of products, equipment, supplies, or services that will be used by or for the purchaser to begin a business in which the seller represents that:
(1)  the purchaser will earn or is likely to earn a profit in excess of the amount of the initial consideration the purchaser paid; and
(2)  the seller will:
(A)  provide a location or assist the purchaser in finding a location for the use or operation of the products, equipment, supplies, or services on premises that are not owned or leased by the purchaser or seller;
(B)  provide a sales, production, or marketing program; or
(C)  buy back or is likely to buy back products, equipment, or supplies purchased or products made, produced, grown, or bred by the purchaser using wholly or partly the products, equipment, supplies, or services that the seller initially sold or leased or offered for sale or lease to the purchaser.
(b)  In this chapter, "business opportunity" does not include:
(1)  the sale or lease of an established and ongoing business or enterprise that has actively conducted business before the sale or lease, whether composed of one or more than one component business or enterprise, if the sale or lease represents an isolated transaction or series of transactions involving a bona fide change of ownership or control of the business or enterprise or liquidation of the business or enterprise;
(2)  a sale by a retailer of goods or services under a contract or other agreement to sell the inventory of one or more ongoing leased departments to a purchaser who is granted the right to sell the goods or services within or adjoining a retail business establishment as a department or division of the retail business establishment;
(3)  a transaction that is:
(A)  regulated by the Texas Department of Licensing and Regulation, the Texas Department of Insurance, the Texas Real Estate Commission, or the director of the Motor Vehicle Division of the Texas Department of Motor Vehicles; and
(B)  engaged in by a person licensed by one of those agencies;
(4)  a real estate syndication;
(5)  a sale or lease to a business enterprise that also sells or leases products, equipment, or supplies or performs services:
(A)  that are not supplied by the seller; and
(B)  that the purchaser does not use with the seller's products, equipment, supplies, or services;
(6)  the offer or sale of a franchise as described by the Petroleum Marketing Practices Act (15 U.S.C. Section 2801 et seq.) and its subsequent amendments;
(7)  the offer or sale of a business opportunity if the seller:
(A)  has a net worth of $25 million or more according to the seller's audited balance sheet as of a date not earlier than the 13th month before the date of the transaction; or
(B)  is at least 80 percent owned by another person who:
(i)  in writing unconditionally guarantees performance by the person offering the business opportunity plan; and
(ii)  has a net worth of more than $25 million according to the person's most recent audited balance sheet as of a date not earlier than the 13th month before the date of the transaction; or
(8)  an arrangement defined as a franchise by 16 C.F.R. Part 436 and its subsequent amendments if:
(A)  the franchisor complies in all material respects in this state with 16 C.F.R. Part 436 and each order or other action of the Federal Trade Commission; and
(B)  before offering for sale or selling a franchise in this state, a person files with the secretary of state a notice containing:
(i)  the name of the franchisor;
(ii)  the name under which the franchisor intends to transact business; and
(iii)  the franchisor's principal business address.
(c)  The secretary of state shall prescribe the form of the notice described by Subsection (b)(8)(B).
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 2.01, eff. April 1, 2009.
Acts 2009, 81st Leg., R.S., Ch. 548 (S.B. 1701), Sec. 1, eff. September 1, 2009.
Acts 2009, 81st Leg., R.S., Ch. 933 (H.B. 3097), Sec. 3A.01, eff. September 1, 2009.