California Civil Code (§ 1812.201)
Defines seller-assisted marketing plans as any sale or lease or offer to sell or lease any product, equipment, supplies or services which require a total initial payment (investment) exceeding $500, but less than $50,000 to begin, maintain or operate a business.
The Federal Trade Commission requires a franchise or business opportunity seller provide the purchaser a detailed disclosure document at least 10 business days before the purchaser pays any money or legally commits to a purchase. The document provides important information about the business, including:
- The names, addresses, and telephone numbers of other purchasers
- A fully-audited financial statement of the seller
- The background and experience of the business' key executives
- The cost required to start and maintain the business
- The responsibilities the purchaser and the seller have to each other once the transaction is completed
Requirements for seller-assisted marketing plans include filing a disclosure statement with the California Secretary of State and providing a list of names and addresses of sellers to Be updated whenever material changes occur, but at least once a year. The list of sales people is to be updated every 6 months.
See (California Civil Code Section 1812.205) for requirements relative to written disclosure statement by the seller to potential purchaser. Some advertisers require a disclosure statement be on file.
Franchise/seller-assisted marketing requires registration with the Secretary of State.
Secretary of State
1500 11th Street, Suite 345
Sacramento, CA 95814
Regulates Franchise Investment Law:
Department of Business Oversight
1515 K Street, Suite 200
Sacramento, CA 95814-5791
To report misleading and deceptive business practices or request consumer publications. The FTC will not handle individual consumer complaints.
Federal Trade Commission Consumer Response Center
600 Pennsylvania Avenue NW
Washington, DC 20580-0001