It’s Business And It’s Personal

Due to precautions related to COVID-19, remote consultations via teleconferencing, Facetime or Skype are available. Please contact our office to discuss if this option is appropriate for your situation. Let’s all stay healthy and safe.

Understanding business opportunities

| Mar 9, 2017 | Buying & Selling Businesses |

There may be a middle ground for aspiring entrepreneurs in North Carolina who have neither the desire to buy a franchise or the desire to start a company from scratch. It may be worth their time and money to look to buy business opportunities from known brands and working business plans. In most cases, the buyer and seller have no relationship after the purchase is made.

This means that the business opportunity buyers can run the business however they see fit. They can also run it under a name that they want without paying trademark or royalty fees. While there is less support from the seller compared to a franchise opportunity, this may be better suited to the buyer’s personality. It is important to fully understand the legal situation surrounding any business opportunity.

For instance, a direct sales network tends to make money when sellers ask others to sell products as part of a downline. If the business makes money based on recruiting others to join as opposed to selling products, it could be considered a pyramid scheme. The FTC has created the Business Opportunity Rule that defines what a business opportunity is and requires that companies that meet the definition to create a one-page disclosure form.

Those who want to purchase a business opportunity may wish to talk to an attorney prior to doing so. Legal counsel may be able to review disclosure statements or otherwise investigate the opportunity before an agreement is reached. An attorney may also represent an investor if the business opportunity is actually a scam or part of a pyramid scheme.

Archives

FindLaw Network