Michael Webster recently wrote a fascinating and important post here about the relationship between:
“a) an internet marketing program
b) the FTC new rule on testimonials, and
c) a particular State business opportunity rule”
The first time I heard Michael Webster claiming that some Internet Marketing training programs were violating State business opportunity rules I thought that he clearly didn’t understand how internet marketing training programs worked. After all, they don’t supply the buyer of the training with a product or service to resell, right? So they aren’t a business opportunity right?
WRONG!
I haven’t reviewed all of the State business opportunity laws and I’m not an attorney, but I randomly took a look at what the state of Washington considers a business opportunity and as far as I can tell their definition doesn’t require that the purchaser be provided with products or services to resell.
Here’s how the State of Washington defines what a “business opportunity” is (IMPORTANT – pay attention to the “OR” logic after the initial “AND”):
“ (1) “Business opportunity” means the sale or lease of any product, equipment, supply, or service which is sold or leased to enable the purchaser to start a business; and:
(a) The seller represents that the seller will provide locations or assist the purchaser in finding locations, on premises neither owned nor leased by the purchaser or seller, for the use or operation of vending machines, display racks, cases, or similar devices or coin-operated amusement machines or similar devices; or
(b) The seller represents that the seller will purchase any product made, produced, fabricated, assembled, modified, grown, or bred by the purchaser using, in whole or part, any product, equipment, supply, or service sold or leased to the purchaser by the seller; or
(c) The seller guarantees that the purchaser will earn an income greater than or equal to the price paid for the business opportunity; or
(d) The seller represents that if the purchaser pays a fee exceeding three hundred dollars directly or indirectly for the purpose of the seller providing a sales or marketing program, the seller will provide such a program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid for the business opportunity.
(2) “Person” includes an individual, corporation, partnership, joint venture, or any business entity.
(3) “Seller” means a person who sells or leases a business opportunity.
(4) “Purchaser” means a person who buys or leases a business opportunity.
(5) “Director” means the director of financial institutions.
(6) “Guarantee” means an undertaking by the seller to refund all or a portion of the purchase price paid for the business opportunity.”
Of course many of the internet marketing training programs would meet this definition if they fell under the state of Washington’s jurisdiction.
What’s bizarre about all of this that I’ve never seen any of the popular internet marketing attorneys bring up these issues, but as I’ve learned over the past year just because you are engaged in “internet marketing” doesn’t mean an “internet marketing attorney” is going to cover all of your legal bases.
For example, a Media and Communications attorney is likely to offer a deeper understanding of the legal issues surrounding online publishing and an attorney specializing in franchise and distributorship law (Michael Webster’s speciality) is more likely to offer a deeper understanding of the legal issues in those areas.
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