Comment Number: 522418-01713
Received: 6/10/2006 3:54:31 PM
Organization:
Commenter: Susan Brokaw
State: MI
Subject: Business Opportunity Rule
Title: Notice of Proposed Rulemaking
CFR Citation: 16 CFR Part 437
No Attachments

Comments:

This letter is to express my strong opposition to the proposed Business Opportunity Rule R511993. I understand that it is the responsibility of the Federal Trade Commission to protect the public from "unfair and deceptive acts or practices," but the rule as proposed would make it difficult for me to operate my business as a Shaklee Independent Distributor. A confusing and burdensome section of the proposed rule is the 7-day waiting period to enroll new distributors. Most people who sign an application do so to purchase Shaklee products at a wholesale price -solely consumers of the products. If they later wish to build a business, all they do is supply Shaklee Corp with their Social Security Number or Tax ID Number. There is no additional kit, fee or application required. The Shaklee Member Kit costs only $19.95. This is far less than many or most consumer purchases none of which require a 7-day waiting period. The 7-day waiting period is unnecessary in that Shaklee Corporation already has a 90% buyback policy for products, including the Member Kit, purchased by a distributor within the last two years. The proposed rule requires the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. There are many problems with this proposed requirement. In this day of identity theft, giving out the personal information of other Shaklee distributors, without their knowledge or consent, to strangers is a concern. People today are understandably reluctant to share their personal information with individuals they may never have met. Providing the ten references also could damage the businesses of numerous Shaklee distributors. Lower ranking distributors often are involved in more than one direct selling company. Providing a list to a potential recruit, who may already be a distributor for a competing direct selling company, may be an invitation to solicit existing distributors for such other opportunity. The ten reference requirement is an administrative burden. In order to obtain the list of 10 prior purchasers, I will need to provide Shaklee Corporation with the prospective distributor's address then wait to receive the list of the 10 nearest distributors who became distributors within the past three years. Each prospective recruit will need a customized disclosure statement. This will result in a delay far longer than seven calendar days before any potential recruit can sign an application. In view of the fact that many people enter direct selling part-time to earn extra income for a specific goal, the long wait which the proposed rule will entail may make the goal unattainable. The proposed rule calls for the release of any information regarding lawsuits that allege misrepresentation, or unfair or deceptive practices over a ten-year period. It does not matter if the company was found innocent or not liable. Today, almost all business lawsuits contain claims of misrepresentation or unfair competition. It does not make sense to me that I would have to disclose these lawsuits unless Shaklee Corporation, or its officers, directors or sales department employees, had been found guilty or liable. Otherwise, fifty-year old companies such as Shaklee Corporation and their distributors would be placed at a disadvantage compared to start-up direct selling companies, which may not yet have experienced litigation but which are far more likely to have legal issues surrounding their opportunities. I have been a Shaklee Distributor for more than 29 years. Originally, I became a Shaklee Distributor because I love the Company's nutritional/household products and wanted to earn additional income working from home. Now my family depends upon this extra income. I believe this proposed new rule has many unintended consequences for direct sellers and that there are less burdensome alternatives available to the agency to achieve its goals. Thank you for your consideration. Sincerely, Susan Brokaw