[Federal Register Volume 76, Number 186 (Monday, September 26, 2011)]
[Notices]
[Pages 59397-59399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24573]


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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 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 December 
31, 2014, the current PRA clearance for information collection 
requirements contained in the Commission's Business Opportunity Rule 
(``Rule''). The current clearance expires on December 31, 2011.

DATES: Comments must be submitted on or before November 25, 2011.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``16 CFR Part 437: 
Paperwork Comment, FTC File No. P114408'' on your comment, and file 
your comment online at https://ftcpublic.commentworks.com/ftc/BusinessOptionRulePRA by following the instructions on the web-based 
form. If you prefer to file your comment on paper, mail or deliver your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, Room H-113 (Annex J), 600 Pennsylvania Avenue, NW., 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Christine M. Todaro (202) 326-3711, Division of 
Marketing Practices, Room 286, Bureau of Consumer Protection, Federal 
Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 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 clearance for the 
information collection requirements contained in 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 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 437 mirrors the requirements and prohibitions of the original 
Franchise Rule, and imposes no additional disclosure or recordkeeping 
obligations or prohibitions.\1\ 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.
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    \1\ 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.
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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 annual disclosure 
burden for new business opportunity sellers will be approximately 7,500 
hours. Staff further estimates that the remaining 2,250

[[Page 59398]]

established business opportunity sellers will require no more than 
approximately 3 hours each to update their disclosure document. 
Accordingly, the cumulative estimated 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 might entail an additional hour of 
recordkeeping per year. Accordingly, staff estimates that business 
opportunity sellers will cumulatively incur approximately 2,500 hours 
of recordkeeping burden per 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: $3,600,000.
    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.\2\ 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)).
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    \2\ Based upon staff's informal discussions with several 
franchises in various regions of the country.
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    Staff anticipates that recordkeeping would be performed by clerical 
staff at approximately $15 per hour.\3\ At 2,500 hours per year for all 
affected business opportunity sellers (see above), this amounts to an 
estimated $37,500 of recordkeeping cost. Thus, the combined labor costs 
for recordkeeping and disclosure for business opportunity sellers is 
approximately $3,600,000.
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    \3\ Based on the ``National Compensation Survey: Occupational 
Wages in the United States, 2010,'' U.S. Department of Labor, Bureau 
of Labor Statistics (May 2011), available at http://www.bls.gov/ncs/ocs/sp/nctb1477.pdf. Clerical estimates are derived from the above 
source data, rounded upward, for ``new accounts clerks.''
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    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).

Request for Comment

    You can file a comment online or on paper. For the FTC to consider 
your comment, we must receive it on or before November 25, 2011. Write 
``16 CFR part 437: Paperwork Comment, FTC File No. P114408'' on your 
comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which is obtained from any person and which is privileged or 
confidential * * *, '' as provided in Section 6(f) of the FTC Act, 15 
U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). If you want 
the Commission to give your comment confidential treatment, you must 
file it in paper form, with a request for confidential treatment, and 
you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 
4.9(c).\4\ Your comment will be kept confidential only if the FTC 
General Counsel, in his or her sole discretion, grants your request in 
accordance with the law and the public interest.
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    \4\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online, or to send them to the Commission by courier or 
overnight service. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/BusinessOptionRulePRA by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``16 CFR part 437: 
Paperwork Comment, FTC File No. P114408'' on your comment and on the 
envelope, and mail or deliver it to the following address: Federal 
Trade Commission, Office of the Secretary, Room H-113 (Annex J), 600 
Pennsylvania Avenue, NW., Washington, DC 20580. If possible, submit 
your paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to

[[Page 59399]]

consider and use in this proceeding as appropriate. The Commission will 
consider all timely and responsive public comments that it receives on 
or before November 25, 2011. You can find more information, including 
routine uses permitted by the Privacy Act, in the Commission's privacy 
policy, at http://www.ftc.gov/ftc/privacy.htm.

David C. Shonka,
Acting General Counsel.
[FR Doc. 2011-24573 Filed 9-23-11; 8:45 am]
BILLING CODE 6750-01-P