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| · | Life Planning: A Lesson In Proactive Life Planning |
| · | Utah Women Run Businesses From Home |
| · | Overwhelmed: Ways to Deal with Overwhelm |
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Best Business Home Opportunity: How to Research a Biz Opp
Posted on Friday, October 28 @ 12:43:26 MSD
Topic: Home Business | Just what is a business opportunity? That question has plagued a great many people trying to decide whether to buy a current independent business, a franchise, or what we'll refer to in this text as a business opportunity.
Not every state with a business opportunity law defines the term in the same manner. However, most of them use the following general criteria to define
one:
- A business opportunity involves the sale or lease of any product, service, equipment, etc. that will enable the purchaser-licensee to begin a business.
- The licensor or seller of a business opportunity declares that it will secure or assist the buyer in finding a suitable location or provide the product to the purchaser-licensee.
- The licensor-seller guarantees an income greater than or equal to the price the licensee-buyer pays for the product when it's resold and that there is a market present for the product or service.
- The initial fee paid to the seller in order to start the business opportunity must range between $400 and $1,000.
- The licensor-seller promises to buy back any product purchased by the licensee-buyer in the event it cannot be sold to the prospective customers of the business.
- Any products or services developed by the seller-licensor will be purchased by the licensee-buyer.
- The licensor-seller of the business opportunity will supply a sales or marketing program for the licensee-buyer that many times will include the use of a trade name or trademark.
The laws covering business opportunity ventures usually exclude the sale of an independent business by its owner. Rather, they are meant to cover the multiple sales of distributorships or businesses that do not meet the requirements of a franchise under the Federal Trade Commission (FTC) rule passed in 1979. This act defines business offerings in three formats: package franchises, product franchises and business opportunity ventures.
In order to be a business opportunity venture under the FTC rule, four elements must be present:
- The individual who buys a business opportunity, often referred to as a licensee or franchisee, must distribute or sell goods or services supplied by the licenser or franchisor.
- The licensor or franchisor must help secure a retail outlet or accounts for the goods and services the licensee is distributing or selling.
- There must be a cash transaction between the two parties of at least $500 prior to or within six months after the licensee or franchisee starts the business venture.
- All terms and conditions of the relationship between the licensor and the licensee must be stated in writing.
You can readily see that the sale of business opportunities as defined by the FTC rule is quite different from the sale of an independent business. When you're dealing with the sale of an independent business, the buyer has no obligations to the seller. Once the sales transaction is completed, the buyer can subscribe to any business operations system he or she prefers. There is no continued relationship required by the seller. Business opportunity ventures, like franchises, are businesses in which the seller makes a commitment of continuing involvement with the buyer. |
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