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Business Opportunity Laws And Rules

Sep 11, 2008
Too many offers of guaranteed income or of projected income can be found online these days. When someone is scouring the internet for job announcements or possibly with the intent of starting a business, the number of business opportunities that pop up is growing quite large. These offers are sometimes not in compliance with business opportunity law specifications. How does one know if that advertisement offering easy income or a product that sells itself is in compliance with the local business opportunity law? A look into state law will provide the answers.

Not A Federal Issue

Business opportunity laws are not made at the national level, currently some states have a business law, and some states do not. Of the states that do have such a statute, the different forms that the law takes are variations on a theme. In general, a business opportunity law that exist is set up to protect people who buy into money making opportunities whether these opportunities turn out to be real money makers or if they are simply scams.

All business opportunities fall under the statute of a law if there is such a law in the state where one resides. It does not matter if you are a legitimate business or are scamming people into selling a product for you. All business opportunities fall under the realm of the law, so anyone thinking of responding to a business opportunity should check the state laws before agreeing to anything.

What the Law Says

Although the particularities of a states business opportunity law vary, the essential piece of the law is that it requires those making an offer of a business opportunity to release a disclosure statement to prospective business partners. In some states, this disclosure statement has to be reviewed by an official before it is allowed to be used as a disclosure statement for a business opportunity. In other states, the contents of the disclosure are discretionary, the business opportunity law simply states that the partner offering a business opportunity must have a disclosure statement to offer prospective partners.

In the disclosure statement, essential information should be found. For example, the number of business partners that the offering individual has held during the last three years, and a history of the offering persons arbitration, litigation and financial history. All of these are considered information that the prospective business partner has the right to have. Of course, anything disclosed in the disclosure statement must be true, so creating a disclosure statement that is full of lies does not make a business compliant with business opportunity law.

The law is designed to give those buying into a business a critical view of what it is that they are buying into. One should have the chance of making an informed decision about such a business opportunity, instead of being victim to a bunch of slogans like guaranteed to sell itself and the like. Business opportunity law requires the offering party to offer real numbers instead of slogans. Take a look at the disclosure statement and only then decide if the business opportunity is legitimate.
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Obinna Heche. Los Angeles - California

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