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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.
The definition of a business opportunity in the Bus Opp Rule is significantly broader than the current definition set forth in the Franchise Rule. The expanded coverage is designed primarily to encompass work-at-home and pyramid businesses. The proposed definition has the following three definitional elements:
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
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The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.