[Federal Register: July 7, 2008 (Volume 73, Number 130)]
[Notices]
[Page 38451-38453]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jy08-93]
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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
[[Page 38452]]
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 October 31, 2011, the current PRA clearance for
information collection requirements contained in the Commission's
Business Opportunity Rule (``Rule''). The current clearance expires on
October 31, 2008.
DATES: Comments must be submitted on or before September 5, 2008.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``16 CFR Part 437: Paperwork Comment, FTC File
No. R511993'' to facilitate the organization of comments. A comment
filed in paper form should include this reference both in the text and
on the envelope and should be mailed or delivered to the following
address: Federal Trade Commission, Room H-135 (Annex J), 600
Pennsylvania Ave., N.W., Washington, D.C. 20580. The Commission is
requesting that any comment filed in paper form be sent by courier or
overnight service, if possible because U.S. postal mail in the
Washington area and at the FTC is subject to delay due to heightened
security precautions. Moreover, because paper mail in the Washington
area and at the FTC is subject to delay, please consider submitting
your comments in electronic form, as prescribed below. If, however, the
comment contains any material for which confidential treatment is
requested, it must be filed in paper form, and the first page of the
document must be clearly labeled ``Confidential.''\1\
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\1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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Comments filed in electronic form should be submitted by following
the instructions on the web-based form at (https://
secure.commentworks.com/ftc-bizopPRA) and following the instructions on
the web-based form. To ensure that the Commission considers an
electronic comment, you must file it on the web-based form at: (https:/
/secure.commentworks.com/ftc-bizopPRA). If this notice appears at
www.regulations.gov, you may also file an electronic comment through
that website. The Commission will consider all comments that
www.regulations.gov forwards to it.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments will be
considered by the Commission and will be available to the public on the
FTC website, to the extent practicable, at www.ftc.gov. As a matter of
discretion, the FTC makes every effort to remove home contact
information for individuals from the public comments it receives before
placing those comments on the FTC website. More information, including
routine uses permitted by the Privacy Act, may be found in the FTC's
privacy policy at (http://www.ftc.gov/ftc/privacy.shtm).
FOR FURTHER INFORMATION CONTACT: Monica Vaca, Attorney, Division of
Marketing Practices, Bureau of Consumer Protection, (202) 326-2245,
Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington
D.C. 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 paperwork clearance for
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 required by the Rule 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 436. Part 437 mirrors the requirements and prohibitions of the
original Franchise Rule, and imposes no additional disclosure or
recordkeeping obligations or prohibitions.\2\ 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. The FTC is seeking to extend the current PRA
clearance to October 31, 2011.\3\
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\2\ 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.
\3\ The current clearance under recently assigned OMB Control
Number 3084-0142 covers the terms of the original Franchise Rule as
applied to business opportunity sellers. The portion of clearance
applicable to franchisors under Part 436 is separately assigned to
pre-existing OMB Control Number 3084-0107.
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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
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annual disclosure burden for new business opportunity sellers will be
approximately 7,500 hours. Staff further estimates that the remaining
2,250 established business opportunity sellers will require no more
than approximately 3 hours each to update their disclosure document.
Accordingly, staff estimates that the cumulative 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 could take up to an additional hour
of recordkeeping per year. Accordingly, staff estimates that business
opportunity sellers will cumulatively incur approximately 2,500 hours
of recordkeeping burden each 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: $3,595,000
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. 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)).
Staff anticipates that recordkeeping would be performed by clerical
staff at approximately $13 per hour. At 2,500 hours per year for all
affected business opportunity sellers (see above), this would amount to
a total cost of $32,500. Thus, the combined labor costs for
recordkeeping and disclosure for business opportunity sellers is
approximately $3,595,000.
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).
William Blumenthal,
General Counsel.
[FR Doc. E8-15143 Filed 7-3-08: 8:45 am]
BILLING CODE 6750-01-S