tions and not for resale, or product inventory sold current investors, but make sure the investors are to the buyer in connection with the buyer’s ongo- not “shills” - - persons who are connected to the ing business. The complete list of exemptions seller, as opposed to independent buyers. Before may be found at AS 45.66.220. signing a contract or making a payment, discuss the disclosure statement and contract with a law- What are the warning signs of a business op- yer, ﬁnancial advisor, or a friend with investment portunity scam? experience. The following are “red ﬂags” that should warn you of the danger in proceeding with a particular THE SALE OF seller or business opportunity: BUSINESS OPPORTUNITIES High pressure sales, including pressure IN ALASKA to sign a contract immediately Earn $ 4 Promises of guaranteed proﬁts or very Work 5,000/year high income ing Pa , From rt Tim Claims that you can make lots of money Home e ! with little investment of time or work For more information, or if you wish to in ess Initial payments that are much higher ﬁle a complaint about a fraudulent business op- Bus wn portunity, please contact: rO than what seems reasonable for a particu lar h You product, service, start-up kit, or training ts Wit Unwillingness to answer questions or Alaska Department of Law roﬁ ge P provide required disclosures 1031 W. Fourth Avenue, Suite 200 Hu g, Anchorage, AK 99501 endin l 269-5200 A-1 V 0 Potentia What should a buyer do before investing in a ,00 $100 m locatio ns 1-888-576-2529 (toll free from outside of Ma u business opportunity? ke Premi Anchorage) We $$$ o ’ll Consumers should do their homework before www.law.state.ak.us/consumer/ sho n the w y Inte purchasing a business opportunity. Contact the ou r Federal Trade Commission how net. Department of Law to see if the seller is registered ! and if so, review registration materials. Check 1-877-FTC-HELP with the BBB (www.bbb.org) for complaint infor- www.ftc.gov mation about the business opportunity, and check www.ftc.gov/bcp/conline/edcams/bizopps/ Consumers other sources on the internet. Talk to index.html Beware! CONSUMERS BEWARE! The Act requires that a seller register What terms must be in the contract for a Advertisements for making lots of with the Department of Law, post a $75,000 sale of a business opportunity? money from your own business sound great. But bond, ﬁle a disclosure statement, use a written consumers need to be wary of claims suggesting purchase contract, and fulﬁll other requirements. The contract for the sale of a business oppor- you can make big proﬁts with little training or Sellers must register with the Department of tunity must be in writing, and the seller must effort. This brochure provides information on Law beginning on April 4, 2005. The registra- give a copy to the buyer at the time buyer signs what you can do to avoid scams involving the tion documents submitted to the Department the contract. The terms of the contract must sale of business opportunities. are public records and may be reviewed by include: members of the public. A business opportunity is an arrangement The payment terms, including the use where the seller leases or sells products, equip- What information must a seller give a buyer of an escrow account if the seller asks ment, supplies, or services to the buyer so the about a business opportunity? for a downpayment of more than 20% buyer can start a business, and the seller agrees of the initial payment to perform services such as providing locations The seller must give a potential buyer a dis- A description of all services the seller where the products can be sold, agreeing to buy closure statement at least 10 days before the will provide, including training back any products assembled by the buyer, or buyer signs a contract or makes a payment. Contact information for the seller, the providing a marketing plan. While there are The disclosure statement provides important seller’s agents, and suppliers legitimate business opportunities for sale, each information, including: The delivery date of the product, year thousands of people across the country be- equipment, or supplies come victims of business opportunity scams. The seller’s business history A complete description of any buy-back The seller’s legal history, including provisions Business opportunities appear in many bankruptcy ﬁlings A statement of the buyer’s right to cancel different forms, from stufﬁng envelopes or doing The seller’s ﬁnancial condition, including medical billing at home, to leasing vending ma- audits and income statements Do all sellers of business opportunities have chines or ATMs and installing them at designated A complete description of the services to register? locations, to creating websites and advertising to be provided by the seller certain products and services on them. The total contract price and schedule of There are a number of exemptions to the Sale If you’re considering purchasing a payments of Business Opportunities Act. For instance, business opportunity, you should know about The basis for the seller’s statements the Act does not apply to a sale or an offer to Alaska’s Sale of Business Opportunities Act, about potential earnings sell a AS 45.66.010 - 45.66.900. This law helps po- business opportunity if the total amount of tential buyers by requiring sellers of business payments under the contract is less than $250; opportunities that cost $250 or more to provide a franchise that complies with federal law; information to the Department of Law and to securities regulated by, or exempt under, state buyers.
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