[Federal Register Volume 76, Number 186 (Monday, September 26, 2011)]
[Notices]
[Pages 59397-59399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24573]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Proposed Collection;
Comment Request; Extension
AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').
ACTION: Notice.
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SUMMARY: The information collection requirements described below will
be submitted to the Office of Management and Budget (``OMB'') for
review, as required by the Paperwork Reduction Act (``PRA''). The FTC
is seeking public comments on its proposal to extend through December
31, 2014, the current PRA clearance for information collection
requirements contained in the Commission's Business Opportunity Rule
(``Rule''). The current clearance expires on December 31, 2011.
DATES: Comments must be submitted on or before November 25, 2011.
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/BusinessOptionRulePRA 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: Under the PRA, 44 U.S.C. 3501-3521, Federal
agencies must obtain approval from OMB for each collection of
information they conduct or sponsor. ``Collection of information''
means agency requests or requirements that members of the public submit
reports, keep records, or provide information to a third party. 44
U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 3506(c)(2)(A)
of the PRA, the FTC is providing this opportunity for public comment
before requesting that OMB extend the existing clearance for the
information collection requirements contained in the Business
Opportunity Rule, 16 CFR part 437 (OMB Control Number 3084-0142).
The FTC invites comments on: (1) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on those who
are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses.
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.
Part 437 mirrors the requirements and prohibitions of the original
Franchise Rule, and imposes no additional disclosure or recordkeeping
obligations or prohibitions.\1\ 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 requirements are subject to the PRA.
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\1\ In March of 2008, the Commission published the Business
Opportunity Rule Revised Notice of Proposed Rulemaking, 73 FR 16110
(March 26, 2008) (``Notice''). The Notice proposed amending the
Business Opportunity Rule substantially, and would, among other
things, reduce the number of required disclosures by sellers of
business opportunities to prospective purchasers. Conversely, the
Notice proposed amending the rule to expand the coverage of entities
required to make disclosures to include a broader array of business
opportunities than those covered by the original Franchise Rule. For
now, however, only those businesses opportunities covered by the
original Franchise Rule--such as vending machine and rack display
opportunities--remain covered under part 437.
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Estimated annual hours burden: 16,750 hours.
Based on a review of trade publications and information from state
regulatory authorities, staff believes 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
[[Page 59398]]
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.\2\ 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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\2\ 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.\3\ 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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\3\ 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 November 25, 2011. 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).\4\ 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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\4\ 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/BusinessOptionRulePRA by following the instructions on the web-
based form. 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
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consider and use in this proceeding as appropriate. The Commission will
consider all timely and responsive public comments that it receives on
or before November 25, 2011. 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.
David C. Shonka,
Acting General Counsel.
[FR Doc. 2011-24573 Filed 9-23-11; 8:45 am]
BILLING CODE 6750-01-P