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FTC Proposes New Business Opportunity Rule
On April 12, 2006, the Federal Trade Commission ('FTC') published in the Federal Register (Business Opportunity Rule 71 Fed. Reg. 19054 (proposed April 12, 2006) (to be codified at 16 CFR Part 437)) a Notice of Proposed Rulemaking for the FTC's long-awaited business opportunity rule ('Bus Opp Rule'). The Bus Opp Rule will cover business opportunity sellers who now are covered by the FTC's franchise trade regulation rule ('Franchise Rule'), as well as sellers of certain business opportunities who are not now covered by the Franchise Rule. The FTC has long believed that the same regulation was not the best way to regulate both business opportunity sellers and franchisors. More specifically, the FTC has concluded that each group's special characteristics (such as history of consumer protection problems, sophistication of its target purchasers, required investment commitment, and complexity of business system) required a different regulatory approach. The Bus Opp Rule is designed to create a regulatory scheme to focus on the special characteristics of business opportunities. Until the Bus Opp Rule is promulgated, business opportunity sellers must continue to comply with the current and, if and when adopted, amended Franchise Rule.
A review of the FTC enforcement history and consumer complaints reveals that business opportunities have been a significantly greater problem for consumers than franchises. In addition, several types of business opportunities are not covered by the existing business opportunity definition contained in the Franchise Rule. To cite some statistics, the FTC has initiated 1) 40 Franchise Rule cases against business opportunities covered by the Franchise Rule since 1990; and 2) 15 'sweeps' of business opportunity sellers (including businesses covered and not covered by the Franchise Rule) in conjunction with other federal and state law enforcement agencies. Moreover, with respect to certain types of businesses not currently covered by the Franchise Rule but which the FTC would cover in its proposed Bus Opp Rule, the FTC has 1) brought 60 enforcement actions against 'work-at-home' businesses (such as envelope stuffing and craft assembly programs) since 1990, has received 37,333 consumer complaints against work-at-home businesses from January 1997 through December 2005, and estimates that consumers have lost more than $15 million in purchasing fraudulent work-at-home businesses; and 2) brought 20 enforcement actions against 'pyramid' schemes since 1990 and received 17,858 consumer complaints during the period January 1997 through December 2005 in which consumers have alleged to have sustained more than $46 million in losses.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?