Comment Number: 522418-05303
Received: 6/30/2006 3:28:59 PM
Organization: Mannatech, Inc.
Commenter: Michael Vanderhoof
State: MI
Subject: Business Opportunity Rule
Title: Notice of Proposed Rulemaking
CFR Citation: 16 CFR Part 437
No Attachments

Comments:

Dear Sir or Madam, I am compelled to write this letter as I am concerned about the proposed Business Opportunity Rule R511993. I believe that in its present form this proposal is unnecessarily burdensome to me as an Independent Associate with Mannatech, Inc., a 12- year old nutraceutical research and development company that utilizes network marketing to educate customers about its nutritional products. I understand that part of the FTC’s responsibilities is to protect the public from “unfair and deceptive acts or practices”, but some of the sections in the proposed rule would substantively impede my ability to continue to offer Mannatech Products. One of the most confusing and onerous sections of the proposed rule is the seven day waiting period to enroll new associates. Mannatech’s sales kits range from only $99 to $1099 and all contain additional value in wholesale products. People but TVs, cars, and other items that cost much more than that and they are not required to wait seven days to make those purchases. Can you imagine the disruption to our nation’s economy if all such purchases had to wait seven days? I also believe that the seven day waiting period is unnecessary because Mannatech already has a 90% buy back policy for all products including sales kits purchased by a salesperson within the last twelve months. Under this waiting period requirement the amount of detailed tracking and paperwork filing will eliminate a substantial number of potential part-time business partners who find it just too much trouble to spend their limited business development time in filling out paperwork. The proposed rule also calls for the release of any information regarding lawsuits involving misrepresentation, or unfair or deceptive practices. It does not matter if the company was found innocent. Today, anyone or any company can be sued for almost any reason. Since Mannatech, Inc. is publicly traded (MTEX on NASDAQ) any lawsuits must already be disclosed. Having to disclose spurious lawsuits puts Mannatech and me at an unfair disadvantage. Finally, the proposed rule would require the disclosure of a minimum of 10 prior purchasers nearest to the prospective purchaser. While I am happy to provide references, in this era of identity theft, I, my associates and my customers would be very uncomfortable giving out personal information of individuals (without their approval) to strangers. In addition, giving away this information could damage the business relationship of the references who may be involved in other companies or businesses including those of competitors. In order to get the list of the 10 prior purchasers, I would need to send the address of the prospective purchaser to Mannatech headquarters and then wait for the list. The sentence required by the proposed rule that states: “If you buy a business opportunity from the seller, your contact information can be disclosed in the future to other buyers” would create an environment where many people would not want to sign up to be a salesperson. They would be reluctant to share their personal information with individuals they may have never met. I have been an Independent Mannatech Associate for more than 10 years and my entire family is involved in this business with me. I became an Independent Mannatech Associate because I saw the value of the products for my and my family’s health and I have been engaged full time in offering the Mannatech products and business opportunity since I began. This is my sole source of income as it is for several key partners in my business and we count on our Mannatech businesses for our health and our financial future. I certainly appreciate the work of the Federal Trade Commission to protect consumers, but I believe that this proposed new rule has many unintended negative consequences and that there are less burdensome alternatives available in achieving its goals. Sincerely, Michael Vanderhoof