Industry Tips
Business Opportunities
Before investing money in a business opportunity, investigate the opportunity carefully. To protect yourself from unscrupulous salespersons, you should be aware of your rights. Under certain conditions, your state may require promoters to provide prospective buyers with detailed disclosure documents at the time of the offer. Such conditions may include requiring the buyer to purchase goods and/or services from a specific source, an initial investment over $500, and representing some combination of the following: that the promoter will assist in establishing accounts or locations, that the buyer can earn a profit in excess of the initial investment, that market demand will enable the buyer to make a profit, or that there is a buy-back arrangement.
To protect yourself, be aware of several warning signs: high pressure sales tactics where the promoter does not want you to take time to investigate the offer; representations of extra- ordinary profits with very little risk; excessively high start-up fees; lack of communication or evasive answers about the plan; representations that the initial investment is secured unless the promoter has provided for a surety bond; or failure to offer information about the buyer's right to cancel.
You should also be wary of any projections of income that are not backed up by specific experiences of existing business opportunities. In this industry, if a company makes projections of income, it must comply with FTC regulation or state law. Something else to consider is the possibility that area saturation could exist. Learn how many sales people are in your area and whether you will have an exclusive territory.
For further information, prospective buyers may wish to contact their Attorney General's Consumer Protection Agency to learn whether a formal disclosure document should be provided. (If you are contacting the BBB by touch tone phone, and are using the voice response system, please stay on the line for a Customer Service Representative between 8:00 AM and 4:00 PM if you would like the phone number to your Attorney General's office.)
