| Comment Number: | 522418-05819 |
| Received: | 7/3/2006 6:09:47 PM |
| Organization: | JCS - A Quixtar Independent Business Owner |
| Commenter: | Joseph Schmitz |
| State: | CA |
| Subject: | Business Opportunity Rule |
| Title: | Notice of Proposed Rulemaking |
| CFR Citation: | 16 CFR Part 437 |
| No Attachments |
Comments:
Dear FTC: I am a Quixtar (formerly Amway) Independent Business Owner (IB0) for over ten years. My business is not large and doesn't generate enormous profits, but I am very happy with it. Some of the proposed provisions will create a chilling effect on my business. In addition to my Quixtar IBO, I also own an equipment leasing company that finances franchises, so I have an understanding of the issues that affect businesses is this arena. I appreciate that the FTC has a difficult task given the types of businesses requiring regulation. The individuals and companies engaged in fraudulent activities hurt general consumers and legitimate business owners like myself and I am interested in finding ways to curb abuse. Here are my areas of concern. 1. 7 Day waiting period to register new prospects. To start a Quixtar IBO business generally entails an investment of $50.00 to $250.00 depending on certain features available. On-going operating expenses are minimal and Quixtar has a well-regarded money back guarantee. The investment to start this business is minimal. A week-long waiting period would cause an inordinate amount of prospects to fall by the wayside, not because the business is bad for them but due to opportunity costs caused by time delay. For example, if a store sells shoes but requires a week wait before allowing you to come back to comlete your purchase, very few shoes would be sold. 2. 10 References. I have serious privacy issues here. There are many thousands of Quixtar IBO's and no guarantee that a reference wouldn't be someone who would then solicit my prospective new IBO. Additionally, if I was used a reference, I would be concerned as to whom might have my personal information (potentially every Quixtar IBO prospect in Southern Calif. - that could be thousands of people). 3. List of all legal actions. The Quixtar business has thousands of IBO's who offer a business with few barriers to entry (unlike an expensive franchise which ensures the prospect base is small). Because of that wide scope it means that it's possible many people are solicited who have questionable backgrounds. This could lend itself to a significant amount of frivolous legal actions. When you add in legal actions against not only the lead corporation (like Quixtar), but also potentially against all of the participating IBO's (out of thousands) you would have a list of legal actions that would not fairly represent the challenges with this opportunity. I would reccommend only listing legal actions where a company or IBO lost a case and also allow migating statements to be expressed. 4. Earnings. Promises of earnings is a key fraud issue in multi-level marketing. However, in a part-time venture, prospective IBO's will put in varying amounts of effort, leading to varying results. I support a policy of a standardized example of earnings and then clear directions so that prospects can analyze all of the variations of earnings they wish. 5. Financial disclosure. In our type of business it is common that a new IBO will register other IBO's. Because they are new, they have no historical financial documents that demonstrate profits yet. As an example, I was inroduced to the Quixtar business by a high school friend who started his business one week before I did. He did not have any proof of profits at that time. I do not support anything that requires each IBO to make available their personal or business financials prior to registering new prospects. It is also a matter of privacy. To sum up, we believe in the need of effective enforcement to halt fraud in unscrupulous activities. However, the some of the propals included here will seriously hurt legitimate small business owners and we ask for your consideration of these suggestions.