a c ti vit y of the fir st par t y in an a rr a n g e ment wh e re b y the se c ond pa rt y will c omm e nc e a c ti vit ies
of the sa
me t y pe of thos e e nga g e d in b y the f i rst pa rt y but without a n y re qu ire d tra ini n g AN D
without the se c ond pa rt y ha ving to foll ow a sp e c ifi c " d a y
-
t o
-
da y busi n e ss oper a ti n g for mat " a s
de fine d b y the f irst p a rt y .
Unde r this def ini ti on, the se c ond pa rt y a g re e s t
o e i ther off e r pr oduc ts, g ood s, or se rvic e s m a de
a va il a ble to him throug h the f irst par t y , e it he r di re c tl y or thr ou g h outs ide v e ndors a nd suppl ier s
with whom t he fir st par t y ha s e stablis he d a r e latio nshi p that is de sig ne d in some w a y to bene fit
the se c ond
pa rt y in hi s p ursuit of thi s a c ti vit y .
F inall y , a tra ns a c ti on wo uld qualif y a s a " B usines s Oppor tuni t y " i f the se c ond pa rt y ha s a gre e d to
pa y a n y one o r c ombi na ti on of the f oll owing to t he fir st par t y :
An up
-
fr ont f e e fo r the o pportunit y to par ti c ipate i n
the a rr a n g e ment or busi ne ss opportuni t y .
An on
-
g oing fe e b a se d o n e it he r g ross sa les, n e t sale s, or pr odu c t orde rs ge ne ra ted b y the s e c ond
pa rt y , with t he de finiti on fo r " on
-
g oin g fe e s" a lso t o include a n y fe e s int e g r a ted into t he c ost paid
b y the se c ond p
a rt y for p roduc ts, g oods, o r se rvic e s provide d to hi m b y the fir st par t y .
The que sti on ha s be e n ra i se d a s to whe the r the doll a r a mount of $5 00.00 a s t he " tri gg e rin g leve l "
of a n y fina n c ial tra nsa c ti on in " B usiness Opp ortu nit y " a rr a n g e ment shoul d be lowe re d
.
I t i s m y opini on that the $500.00 " tri gg e rin g lev e l " shoul d not be lowe r e d. At the le ve l of
$500.00, virtuall y a ll " B u siness Oppor tuni ti e s" tha t would be qua li fie d unde r a n y of the
provisions spe c ifie d a bov e will be c ove r e d a s v e r y fe w, if a n y , o f those
t y pe s of c ompanie s
would ha ve struc tur e d a f e e a n y low e r tha n $500.0 0 a s a pra c ti c a l r e a li t y o f the e c onomi c s of on
-
g oin g busi ne ss a c ti vit y in Amer ica .
Que sti on/Topi c : C ondit i ona l ex e mpt ion for Tr a de S how Promot e rs.
C omm e nt/ R e sponse: I a gre e with t hose who
fe e l t ha t t he C omm iss ion sh ou ld continue to pr ovide
a n e x e mpt ion for Tr a de S how Promot e rs pr ovided that the y mak e a v a il a ble to attende e s a t t he ir
shows a " sp e c ific c onsu mer e duc a ti on noti c e ."
Tr a de S how Promot e rs a re not fr a n c hise br ok e rs n or a re th e y dir
e c tl y or ind ire c tl y a ff il iate d with
the f ra n c hisor e x hibi tors a t t he ir shows. F urth e rm ore , it would be virtua ll y im possi ble f or T ra de
S how Promot e rs to de ter mi ne whe ther or no t f ra n c hisors e x hibi ti ng in t he ir shows a re in
c ompl e te, pa rtia l, or non
-
c ompl ian
c e with The R ul e or a n y othe r F TC r e g ulations.
I t i s poss ibl e for T ra de S how Promot e rs to r e quire a nd to enf or c e a re quir e ment that a ll
fr a nc hisors e x hibi ti ng in t he ir shows ha ve " a v a il a ble f or pu bli c inspec ti on " a c urr e nt UF OC
Of fe ring C irc ular doc um e nt.
This re quire ment wo uld m e a n a nd shoul d c on ti nue to re quire that
e a c h f ra n c hisor maintain a n a c tual c op y of the U F OC a t t he booth, not for dist ributi on but ra ther
for " ph y si c a l ex a mi na ti on" b y a n y a tt e nde e a t t he show w ho re que sts to se e a UF OC.
2
3
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a c ti vit y of the fir st par t y in an a rr a n g e ment wh e re b y the se c ond pa rt y will c omm e nc e a c ti vit ies
of the sa
me t y pe of thos e e nga g e d in b y the f i rst pa rt y but without a n y re qu ire d tra ini n g AN D
without the se c ond pa rt y ha ving to foll ow a sp e c ifi c " d a y
-
t o
-
da y busi n e ss oper a ti n g for mat " a s
de fine d b y the f irst p a rt y .
Unde r this def ini ti on, the se c ond pa rt y a g re e s t
o e i ther off e r pr oduc ts, g ood s, or se rvic e s m a de
a va il a ble to him throug h the f irst par t y , e it he r di re c tl y or thr ou g h outs ide v e ndors a nd suppl ier s
with whom t he fir st par t y ha s e stablis he d a r e latio nshi p that is de sig ne d in some w a y to bene fit
the se c ond
pa rt y in hi s p ursuit of thi s a c ti vit y .
F inall y , a tra ns a c ti on wo uld qualif y a s a " B usines s Oppor tuni t y " i f the se c ond pa rt y ha s a gre e d to
pa y a n y one o r c ombi na ti on of the f oll owing to t he fir st par t y :
An up
-
fr ont f e e fo r the o pportunit y to par ti c ipate i n
the a rr a n g e ment or busi ne ss opportuni t y .
An on
-
g oing fe e b a se d o n e it he r g ross sa les, n e t sale s, or pr odu c t orde rs ge ne ra ted b y the s e c ond
pa rt y , with t he de finiti on fo r " on
-
g oin g fe e s" a lso t o include a n y fe e s int e g r a ted into t he c ost paid
b y the se c ond p
a rt y for p roduc ts, g oods, o r se rvic e s provide d to hi m b y the fir st par t y .
The que sti on ha s be e n ra i se d a s to whe the r the doll a r a mount of $5 00.00 a s t he " tri gg e rin g leve l "
of a n y fina n c ial tra nsa c ti on in " B usiness Opp ortu nit y " a rr a n g e ment shoul d be lowe re d
I t i s m y opini on that the $500.00 " tri gg e rin g lev e l " shoul d not be lowe r e d. At the le ve l of
$500.00, virtuall y a ll " B u siness Oppor tuni ti e s" tha t would be qua li fie d unde r a n y of the
provisions spe c ifie d a bov e will be c ove r e d a s v e r y fe w, if a n y , o f those
t y pe s of c ompanie s
would ha ve struc tur e d a f e e a n y low e r tha n $500.0 0 a s a pra c ti c a l r e a li t y o f the e c onomi c s of on
g oin g busi ne ss a c ti vit y in Amer ica .
Que sti on/Topi c : C ondit i ona l ex e mpt ion for Tr a de S how Promot e rs.
C omm e nt/ R e sponse: I a gre e with t hose who
fe e l t ha t t he C omm iss ion sh ou ld continue to pr ovide
a n e x e mpt ion for Tr a de S how Promot e rs pr ovided that the y mak e a v a il a ble to attende e s a t t he ir
shows a " sp e c ific c onsu mer e duc a ti on noti c e ."
Tr a de S how Promot e rs a re not fr a n c hise br ok e rs n or a re th e y dir
e c tl y or ind ire c tl y a ff il iate d with
the f ra n c hisor e x hibi tors a t t he ir shows. F urth e rm ore , it would be virtua ll y im possi ble f or T ra de
S how Promot e rs to de ter mi ne whe ther or no t f ra n c hisors e x hibi ti ng in t he ir shows a re in
c ompl e te, pa rtia l, or non
-
c ompl ian
c e with The R ul e or a n y othe r F TC r e g ulations.
I t i s poss ibl e for T ra de S how Promot e rs to r e quire a nd to enf or c e a re quir e ment that a ll
fr a nc hisors e x hibi ti ng in t he ir shows ha ve " a v a il a ble f or pu bli c inspec ti on " a c urr e nt UF OC
Of fe ring C irc ular doc um e nt.
This re quire ment wo uld m e a n a nd shoul d c on ti nue to re quire that
e a c h f ra n c hisor maintain a n a c tual c op y of the U F OC a t t he booth, not for dist ributi on but ra ther
for " ph y si c a l ex a mi na ti on" b y a n y a tt e nde e a t t he show w ho re que sts to se e a UF OC.
2
3
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