Before You Start Your Business Opportunity (Part 1 of 2)

Cliff Ennico on

"We have operated a successful service business for many years.

We no longer want to run the business ourselves, but we think this type of business is an excellent opportunity for other people. So we have come up with a training program to teach other people how to build a business like ours.

Customers will pay $10,000 up front for the training program (a one-week live program at a local hotel), and an additional $1,000 a year for a 'refresher' course, which we will deliver online. The training program will include an entire section on marketing, but we won't be giving attendees lists of customers or otherwise guaranteeing that they will have customers. They don't have to use our name, and they can sell their services anywhere they like. (They won't be given exclusive territories.)

We've done some homework, and we don't think we are selling franchises. But we are seeing lots of references online to 'business opportunities' that seem to be regulated in some way.

Are we setting up a 'business opportunity' with our training program, and, if so, what do we have to do to comply with the law?"

First, the good news: Your training program is almost certainly NOT a franchise under federal regulations. You are not requiring trainees to use your brand name, you are not assigning them exclusive territories, and you are not asking for periodic "royalty payments" for the privilege of running the business. Yes, customers will pay for training, but they can elect not to participate in the annual "refresher" course, in which case they owe you nothing.


Now for the tricky part: You may indeed have a "business opportunity" on your hands.

The definition of a "business opportunity" is somewhat slippery. The Federal Trade Commission and about 25 states regulate business opportunities, and the definitions vary from state to state because there are different types of business opportunity.

Florida, which has one of the most comprehensive regulatory schemes, defines a "business opportunity" as the sale or lease of any products, equipment, supplies or services to enable customers to start a business for a price or fee that exceeds $500. and the seller promises that it (or anyone affiliated with or referred by it) will do any one of the following:

-- Provide locations, or assist you in finding locations, for the use of vending machines, racks, display cases or other similar devices, or currency-operated amusement machines or devices, on premises that neither you nor the seller own or lease ("Type 1").


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