| Comment Number: | 522418-00098 |
| Received: | 5/27/2006 11:30:11 AM |
| Organization: | Independent Mannatech Associate |
| Commenter: | Kathleen Dedon |
| State: | WA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| Attachment: | 522418-00098.pdf Download Adobe Reader |
Comments:
May 27, 2006 Federal Trade Commission/Office of the Secretary, Room H-135 (Annex W) Re: Business Opportunity Rule, R511993 600 Pennsylvania Avenue, NW Washington, DC 20580 RE: Business Opportunity Rule, R511993 Dear Sir/Madam, I am writing in response to the proposed New Business Opportunity Rule R511993, if not modified, will be a significant impediment and burden to the network marketing industry. This new rule, although well-intended, represents a significant burden to the free market trade. The proposed rule would require a de facto seven day waiting period to enroll new distributors. In essence, one would have to sell a person twice on the same business—even if the start-up fee is a mere $39.00. While I support some of the disclosures with modification, I am opposed to a seven-day waiting period because it is excessive burden to any company and distributor who would be required to document and follow-up on the process and an impediment to new business development. The rule also calls for the release of any information regarding prior litigation and civil or criminal legal actions involving misrepresentation, or unfair or deceptive practices, even if you were found innocent. In our lawsuit-happy culture, anyone can be sued for anything almost with impunity. Regardless of the outcome, you would have to disclose it and explain it to a new business associate, which is patently unfair. The majority of people who sign up as associates with network marketing companies do so as consumers so they can purchase the products at the wholesale price. Is a car dealer required to disclose prior litigation against the Ford Motor Company to someone who is purchasing a car? Does a pharmaceutical drug company have to disclose prior litigation to someone who is purchasing a prescription drug? Does a toy manufacturer have to disclose prior litigation prior to someone purchasing a toy? This is unfair to the business associates of legitimate companies who happen to use the network marketing business model. Lastly, the rule requires the disclosure of a minimum of 10 purchasers closest to you. While it is a good practice to provide references of satisfied customers, this is a burden for small businesses and, as a requirement, is a violation of personal confidentiality. The network marketing industry is one of the few remaining opportunities for people to leverage their time and limited resources to earn additional income or to create a new career. Once scoffed at by investors, many network marketing companies are publicly traded on Wall Street including Mannatech, Herbalife, Nu Skin, Pre-Paid Legal Services, USANA and others. Network marketing is being used by blue-chip corporations including Citigroup, MCI and IBM. Top business management leaders and New York Times best-selling authors Robert Kiyosaki, Paul Zane Pilsner, and Steve Covey have endorsed network marketing. The industry is also growing in popularity and contributes to the US economy. This growth should be encouraged. There are 13 million Americans involved in this network marketing industry today. Lastly, the network marketing industry contributes to our growing economy. Sales of products and services through network marketing are estimated at more than $29 billion in 2003. I believe this proposed new rule exceeds what is necessary and needs significant modification. We live in a free market economy where people have the responsibility of making informed decisions based on best information. A better approach would be to provide consumers with objective criteria when analyzing a business opportunity and let an informed market proceed. I am in support of the disclosures that should be made during the sales process without the requirement of a seven-day waiting period, only if modified as suggested.