[Federal Register Volume 76, Number 234 (Tuesday, December 6, 2011)]
[Notices]
[Pages 76162-76164]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-31216]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; Comment Request

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

ACTION: Notice.

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SUMMARY: The FTC intends to ask the Office of Management and Budget 
(``OMB'') to extend through December 31, 2014, the current Paperwork 
Reduction Act (``PRA'') clearance for the information collection 
requirements in the Commission's Business Opportunity Rule (``Rule''). 
That clearance expires on December 31, 2011.

DATES: Comments must be submitted on or before January 5, 2012.

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/BusinessOptionRulePRA2 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: 
    Title: Business Opportunity Rule, 16 CFR part 437.
    OMB Control Number: 3084-0142.
    Type of Review: Extension of currently approved collection.
    Abstract: 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 disclosure and recordkeeping requirements are subject to 
the PRA.
    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, 
and it mirrors the requirements and prohibitions of the original 
Franchise Rule. The FTC recently announced final amendments to the Rule 
that will take effect on March 1, 2012.\1\ This notice, however, 
applies to the current requirements of Part 437, which remain in effect 
until February 28, 2012.\2\
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    \1\ See http://www.ftc.gov/opa/2011/11/busopp.shtm (November 22, 
2011 press release).
    \2\ A separate PRA analysis has been prepared within the 
associated rulemaking that addresses the changes in PRA burden per 
respondent (largely, reductions due to streamlined disclosure 
requirements) attributable to the final amendments and the Rule's 
new applicability to work-at-home opportunity sellers.
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    On September 26, 2011, the Commission sought comment on the 
information collection requirements associated with the Rule currently 
in effect. 76 FR 59,397. No comments were received. Pursuant to the OMB 
regulations, 5 CFR part 1320, that implement the PRA, 44 U.S.C. 3501 et 
seq., the FTC is providing a second opportunity for the public to 
comment while seeking OMB approval to renew the pre-existing clearance 
for the Rule.
    Estimated annual hours burden: 16,750 hours.
    Based on a review of trade publications and information from state 
regulatory authorities, staff believes

[[Page 76163]]

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 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.\3\ 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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    \3\ 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.\4\ 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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    \4\ 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 January 5, 2012. 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).\5\ 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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    \5\ 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/BusinessOptionRulePRA2 by following the instructions on the web-
based form.

[[Page 76164]]

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 consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before January 5, 2012. 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.

Willard K. Tom,
General Counsel..
[FR Doc. 2011-31216 Filed 12-5-11; 8:45 am]
BILLING CODE 6750-01-P