[Federal Register Volume 73, Number 130 (Monday, July 7, 2008)]
[Notices]
[Pages 38451-38453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-15143]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request; Extension

AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').

ACTION: Notice.

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SUMMARY: The information collection requirements described below will 
be submitted to the Office of Management

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and Budget (``OMB'') for review, as required by the Paperwork Reduction 
Act (``PRA''). The FTC is seeking public comments on its proposal to 
extend through October 31, 2011, the current PRA clearance for 
information collection requirements contained in the Commission's 
Business Opportunity Rule (``Rule''). The current clearance expires on 
October 31, 2008.

DATES: Comments must be submitted on or before September 5, 2008.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``16 CFR Part 437: Paperwork Comment, FTC File 
No. R511993'' to facilitate the organization of comments. A comment 
filed in paper form should include this reference both in the text and 
on the envelope and should be mailed or delivered to the following 
address: Federal Trade Commission, Room H-135 (Annex J), 600 
Pennsylvania Ave., N.W., Washington, D.C. 20580. The Commission is 
requesting that any comment filed in paper form be sent by courier or 
overnight service, if possible because U.S. postal mail in the 
Washington area and at the FTC is subject to delay due to heightened 
security precautions. Moreover, because paper mail in the Washington 
area and at the FTC is subject to delay, please consider submitting 
your comments in electronic form, as prescribed below. If, however, the 
comment contains any material for which confidential treatment is 
requested, it must be filed in paper form, and the first page of the 
document must be clearly labeled ``Confidential.''\1\
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    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accompanied by an explicit request for confidential treatment, 
including the factual and legal basis for the request, and must 
identify the specific portions of the comment to be withheld from 
the public record. The request will be granted or denied by the 
Commission's General Counsel, consistent with applicable law and the 
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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    Comments filed in electronic form should be submitted by following 
the instructions on the web-based form at (https://secure.commentworks.com/ftc-bizopPRA) and following the instructions on 
the web-based form. To ensure that the Commission considers an 
electronic comment, you must file it on the web-based form at: (https://secure.commentworks.com/ftc-bizopPRA). If this notice appears at 
www.regulations.gov, you may also file an electronic comment through 
that website. The Commission will consider all comments that 
www.regulations.gov forwards to it.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments will be 
considered by the Commission and will be available to the public on the 
FTC website, to the extent practicable, at www.ftc.gov. As a matter of 
discretion, the FTC makes every effort to remove home contact 
information for individuals from the public comments it receives before 
placing those comments on the FTC website. More information, including 
routine uses permitted by the Privacy Act, may be found in the FTC's 
privacy policy at (http://www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Monica Vaca, Attorney, Division of 
Marketing Practices, Bureau of Consumer Protection, (202) 326-2245, 
Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington 
D.C. 20580.

SUPPLEMENTARY INFORMATION: Under the PRA, 44 U.S.C. 3501-3521, federal 
agencies must obtain approval from OMB for each collection of 
information they conduct or sponsor. ``Collection of information'' 
means agency requests or requirements that members of the public submit 
reports, keep records, or provide information to a third party. 44 
U.S.C. 3502(3), 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) 
of the PRA, the FTC is providing this opportunity for public comment 
before requesting that OMB extend the existing paperwork clearance for 
the Business Opportunity Rule, 16 CFR Part 437 (OMB Control Number 
3084-0142).
    The FTC invites comments on: (1) whether the proposed collection of 
information required by the Rule is necessary for the proper 
performance of the functions of the agency, including whether the 
information will have practical utility; (2) the accuracy of the 
agency's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (3) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (4) ways to minimize the burden of the 
collection of information on those who are to respond, including 
through the use of appropriate automated, electronic, mechanical, or 
other technological collection techniques or other forms of information 
technology, e.g., permitting electronic submission of responses.
    The Rule is designed to ensure that prospective purchasers of a 
business opportunity receive information that will help them evaluate 
the opportunity that is presented to them. Part 437 was promulgated in 
March of 2007, concurrently with the amendment of the Franchise Rule, 
Part 436. Part 437 mirrors the requirements and prohibitions of the 
original Franchise Rule, and imposes no additional disclosure or 
recordkeeping obligations or prohibitions.\2\ The Rule requires 
business opportunity sellers to furnish to prospective purchasers a 
disclosure document that provides information relating to the seller, 
the seller's business, the nature of the proposed business opportunity, 
as well as additional information regarding any claims about actual or 
potential sales, income, or profits for a prospective business 
opportunity purchaser. The seller must also preserve information that 
forms a reasonable basis for such claims. These requirements are 
subject to the PRA. The FTC is seeking to extend the current PRA 
clearance to October 31, 2011.\3\
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    \2\ In March of 2008, the Commission published the Business 
Opportunity Rule Revised Notice of Proposed Rulemaking, 73 FR 16110 
(March 26, 2008) (``Notice''). The Notice proposed amending the 
Business Opportunity Rule substantially, and would, among other 
things, reduce the number of required disclosures by sellers of 
business opportunities to prospective purchasers. Conversely, the 
Notice proposed amending the rule to expand the coverage of entities 
required to make disclosures to include a broader array of business 
opportunities than those covered by the original Franchise Rule. For 
now, however, only those businesses opportunities covered by the 
original Franchise Rule -- such as vending machine and rack display 
opportunities -- remain covered under part 437.
    \3\ The current clearance under recently assigned OMB Control 
Number 3084-0142 covers the terms of the original Franchise Rule as 
applied to business opportunity sellers. The portion of clearance 
applicable to franchisors under Part 436 is separately assigned to 
pre-existing OMB Control Number 3084-0107.
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Estimated annual hours burden: 16,750 hours

    Based on a review of trade publications and information from state 
regulatory authorities, staff believes that, on average, from year to 
year, there are approximately 2,500 business opportunity sellers, with 
perhaps about 10% of that total reflecting an equal amount of new and 
departing business entrants.
    The burden estimates for compliance will vary depending on the 
particular business opportunity seller's prior experience with the 
original Franchise Rule. Staff estimates that 250 or so new business 
opportunity sellers will enter the market each year, requiring 
approximately 30 hours each to develop a Rule-compliant disclosure 
document. Thus, staff estimates that the cumulative

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annual disclosure burden for new business opportunity sellers will be 
approximately 7,500 hours. Staff further estimates that the remaining 
2,250 established business opportunity sellers will require no more 
than approximately 3 hours each to update their disclosure document. 
Accordingly, staff estimates that the cumulative annual disclosure 
burden for established business opportunity sellers will be 
approximately 6,750 hours.
    Business opportunity sellers may need to maintain additional 
documentation for the sale of business opportunities in states not 
currently requiring these records as part of their regulation of 
business opportunity sellers. This could take up to an additional hour 
of recordkeeping per year. Accordingly, staff estimates that business 
opportunity sellers will cumulatively incur approximately 2,500 hours 
of recordkeeping burden each year (2,500 business opportunity sellers x 
1 hour).
    Thus, the total burden for business opportunity sellers is 
approximately 16,750 hours (7,500 hours of disclosure burden for new 
business opportunity sellers + 6,750 hours of disclosure burden for 
established business opportunity sellers + 2,500 of recordkeeping 
burden for all business opportunity sellers).

Estimated annual labor cost: $3,595,000

    Labor costs are determined by applying applicable wage rates to 
associated burden hours. Staff presumes an attorney will prepare or 
update the disclosure document at an estimated $250 per hour. As 
applied, this would yield approximately $3,562,500 in labor costs 
attributable to compliance with the Rule's disclosure requirements 
((250 new business opportunity sellers x $250 per hour x 30 hours per 
seller) + (2,250 established business opportunity sellers x $250 per 
hour x 3 hours per seller)).
    Staff anticipates that recordkeeping would be performed by clerical 
staff at approximately $13 per hour. At 2,500 hours per year for all 
affected business opportunity sellers (see above), this would amount to 
a total cost of $32,500. Thus, the combined labor costs for 
recordkeeping and disclosure for business opportunity sellers is 
approximately $3,595,000.

Estimated non-labor cost: $3,887,500

    Business opportunity sellers must also incur costs to print and 
distribute the disclosure document. These costs vary based upon the 
length of the disclosures and the number of copies produced to meet the 
expected demand. Staff estimates that 2,500 business opportunity 
sellers print and mail 100 documents per year at a cost of $15 per 
document, for a total cost of $3,750,000 (2,500 business opportunity 
sellers x 100 documents per year x $15 per document).
    Business opportunity sellers must also complete and disseminate an 
FTC-required cover sheet that identifies the business opportunity 
seller, the date the document is issued, a table of contents, and a 
notice that tracks the language specifically provided in the Rule. 
Although some of the language in the cover sheet is supplied by the 
government for the purpose of disclosure to the public, and is thus 
excluded from the definition of ``collection of information'' under the 
PRA, see 5 CFR 1320.3(c)(2), there are residual costs to print and mail 
these cover sheets, including within them the presentation of related 
information beyond the supplied text. Staff estimates that 2,500 
business opportunity sellers complete and disseminate 100 cover sheets 
per year at a cost of approximately $0.55 per cover sheet, or a total 
cost of approximately $137,500 (2,500 business opportunity sellers x 
100 cover sheets per year x $0.55 per cover sheet).
    Accordingly, the cumulative non-labor cost incurred by business 
opportunity sellers each year attributable to compliance will be 
approximately $3,887,500 ($3,750,000 for printing and mailing documents 
+ $137,500 for completing and mailing cover sheets).

William Blumenthal,
General Counsel.
[FR Doc. E8-15143 Filed 7-3-08: 8:45 am]
BILLING CODE 6750-01-S