| Comment Number: | 522418-03193 |
| Received: | 6/17/2006 11:59:46 PM |
| Organization: | World Ventures |
| Commenter: | Fletch Rainey |
| State: | CA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
Dear Sir/Madam, I am writing in response to the proposed New Business Opportunity Rule R511993, that, 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 $19.95. While I support some of the disclosures with modification, I am opposed to a seven-day waiting period because it is an 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 requires that any earnings claim statement made by the distributor or company to a prospect, whether written or oral, general or specific, be validated with a detailed "Earnings Claims Statement Required By Law." Additionally, the distributor would be required to provide written substantiation of any earnings claim made upon request. I support the disclosure of an average earnings income statement because it is good business practice to establish realistic expectations. However, I oppose being forced to provide written substantiation because it is an excessive burden considering the investment of money to enter into the business is quite nominal. 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 one was 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. I would only support the disclosure of previous litigation of companies, executives, affiliated companies and the like involving fraud and misrepresentation if the party is found guilty. If the defendant is found not guilty, the opposing parties agreed to settle without admission of guilt or the case is still pending, then it should not be necessary to disclose this information. If the parties agreed to settle without admission of guilt, there usually is some public document available, particularly if it involves a government agency and further disclosure therefore would be unnecessary. If a case is pending, it shouldn't be commented upon at all. 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. Unfortunately, requiring the release of this information can threaten the business relationship of the references who may be involved in other companies or businesses. In addition, it subjects these references to cross-marketing by competitors. I am recommending that contact information for purchasers be available upon request, that their availability be published on company materials, and that due to Internet-marketing, they not be limited to geographic proximity. 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 Herbalife, Nu Skin, Avon, Mary Kay Cosmetics, 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, Donald Trump, Paul Zane Pilsner, and Steve Covey have all endorsed network marketing as a viable, respectable business model. 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 the 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 alone!!! I have been involved in the network marketing industry for just over a year. I have met some of the finest people in the country and have been introduced to some an incredibly useful product. I am involved purely for the reason of helping others NOT become part of the 98% of Americans who reach retirement age depending upon family, friends or the government to survive!! This home based business helped me significantly, and allows me to spend more time with my family while earning additional income. I understand and value the role of the FTC mission "to stand up for America's free market process and for its consumers, who benefit from competitive markets in which truthful information flows." However, 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 the best information available. A better approach would be to provide consumers with objective criteria when analyzing a business opportunity and let an informed market proceed. Thank you, in advance, for reviewing and posting my comments. Please accept my warmest personal regards. Sincerely, Fletch Rainey, RTA World Ventures