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TEXAS CIVIL STATUTES
TITLE 79. SUBTITLE THREE--CONSUMER PROTECTION
CHAPTER SIXTEEN--BUSINESS OPPORTUNITIES

Art. 5069-16.04. Construction and Application
This statute shall be liberally construed and applied to promote its underlying purposes, which are to protect persons against false, misleading, or deceptive practices in the advertising, offering for sale or lease, and sale or lease of business opportunities to provide efficient and economical procedures to secure such protection.

Art. 5069-16.05. Definitions
As used in this statute:
(1) "Person" means an individual, partnership, corporation, association, or other group, however organized.
(2) "Business opportunity" means the sale or lease of any products, equipment, supplies, or services:
(A) which are sold to the purchaser upon payment to the seller or its affiliate or designee of an initial required consideration exceeding  $500 which will be used by or on behalf of the purchaser to begin a  business; and
(B) in which the seller represents that the purchaser will earn or is likely to earn a profit in excess of the initial consideration paid by the purchaser; and
(i) that the seller will provide locations or assist the purchaser in finding locations for the use or operation of the products, equipment, supplies, or services on premises neither owned nor leased by the purchaser or seller; or
(ii) that the seller will provide a sales, production, or marketing program; or
(iii) that the seller will buy back or is likely to buy back any products, supplies, or equipment purchased or any product made, produced, fabricated, grown, or bred by the purchaser using in whole or in part the product, supplies, equipment, or services which were initially sold or leased or offered for sale or lease to the purchaser  by the seller.
(3) "Seller" is a principal or agent who sells or leases or offers to sell or lease a business opportunity.
(4) "Purchaser" means a person who is solicited to become obligated or does become obligated on a business opportunity contract.
(5) "Equipment" includes machines, all electrical devices, video and audio devices, molds, display racks, vending machines, coin-operated game machines, machines which dispense products, and display units of all kinds.
(6) "Supplies" includes any and all materials used to produce, grow, breed, or make any product or item.
(7) "Product" includes any tangible chattel, including food or living animals.
(8) "Services" includes any assistance, guidance, direction, work, labor, or services provided by the seller to initiate or maintain a business opportunity.
(9) "Business opportunity contract" means any agreement, which is intended to or does obligate a purchaser to a seller.
(10) "Initial consideration" means the total amount a purchaser is obligated to pay under the terms of a business opportunity contract prior to or at the time of delivery of the equipment, supplies, products, or services or within six months of the purchaser commencing operation of the business opportunity plan. If the contract sets forth a specific total sale price for purchase of the business opportunity plan which total price is to be paid partially as a down payment and then in an additional payment or installments, then "initial consideration" means the entire total sale price. Initial consideration shall not include the not-for-profit sale of sales demonstration materials, samples, and equipment, not to exceed $500.
(11) "Buy-back" or "secured investment" means any representation, which implies in any manner that the purchaser’s payment, is protected from loss.
(12) "Marketing program" means advice or training provided to the purchaser by the seller or a person recommended by the seller, pertaining to the sale of any products, equipment, supplies, or services, and the advice or training includes but is not limited to preparing or providing:
(A) promotional literature, brochures, pamphlets, or advertising materials;
(B) training regarding the promotion, operation, or management of the business opportunity; or
(C) operational, managerial, technical, or financial guidelines or assistance.
(13) "Designee" means a person who is designated by a seller as a source of goods or services to be used by a purchaser in connection with the business opportunity and who gives consideration to the seller in connection with the designation or the disposition of goods or services to the purchaser.

Art. 5069-16.06. Exemptions
As used in this statute:
(1) "Business opportunity" does not include:
As used in this statute:

(1) "Business opportunity" does not include:
(H) any arrangement defined as a " franchise" under the then current Federal Trade Commission regulations entitled Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures in 16 C.F.R. Section 436.2(a)(1)(i) if the franchiser complies in all material respects in the State of Texas with the disclosure requirements and prohibitions concerning franchising in such Federal Trade Commission regulations applicable to such franchiser including the relevant exemptions and exclusions in the regulations or an order or other action of the Federal Trade Commission. Any alternative franchise disclosure statements permitted by the Federal Trade Commission may be used in lieu of its franchise disclosure requirements. This subsection applies provided that prior to offering for sale or selling a franchise in this state, a person files a notice with the secretary of state, along with any reasonable fee that may be charged by the secretary of state to cover the costs incurred as a result of this filing. The form of the notice shall be prescribed by the secretary of state and shall require only the name of the franchiser, the name under which the franchiser intends to do business, and the franchiser’s principal business address.
(2) In any administrative, civil, or criminal proceeding related to this Act, the burden of proving an exemption, an exception from a definition, or an exclusion from this Act is upon the person claiming the exemption, exception, or exclusion.

Art. 5069-16.07. Relation to Other Regulatory Agencies
Whenever any disclosures are required by this statute, a seller may use copies of similar disclosure documents which are required by the State Securities Board, Securities Exchange Commission, or Federal Trade Commission in transactions with purchasers or prospective purchasers or for purposes of filing with the secretary of state. Copies of such documents may be used, however, only when such copies contain all of the information required to be disclosed by this statute.

Art. 5069-16.08. Registration and Filing
(a) Prior to the sale or offer for sale, including advertising, of a business opportunity, the principal seller shall register said business opportunity with the secretary of state by filing a copy of all disclosure statements required under Sections 16.09 and 16.11 of this chapter, as well as a list of the names and resident addresses of those individuals who sell or will sell the business opportunity on behalf of the principal seller. The disclosure statements on file shall be updated through a new filing whenever material changes occur, but at least once a year. The list of salespersons shall be updated through a new filing every six months. If the principal seller is required to provide a bond or establish a trust account, he shall contemporaneously file with the secretary of state a copy of the bond or a copy of the formal notification by the depository that the trust account is established.
(b) Any seller who has registered as required by Section (a) of this article that does not comply with the requirements governing the updating of filings made under this article may have its registration terminated.
The secretary of state may promulgate rules governing the termination of such delinquent registration, the effective dates thereof, and any grace periods.
(c) Subject to principles of procedural due process under applicable law, no business opportunity registration shall be terminated under Section (a) of this article unless the secretary of state gives the business opportunity registrant not less than 30 days notice of its delinquency by certified mail addressed to the registered agent or to its principal place of business noted in the latest filing made under this Act.
(d) The secretary of state may charge a reasonable fee to cover the costs incurred as a result of the filing herein required.

Art. 5069-16.09. Required Disclosure Statement
At least 10 business days prior to the time the purchaser signs a business opportunity contract or at least 10 business days prior to the receipt of any consideration by the seller, whichever occurs first, the seller must provide the prospective purchaser a written document, the cover sheet of which is entitled, in at least 12-point bold face capital letters "DISCLOSURES REQUIRED BY TEXAS LAW." Under this title shall
appear the following statement in at least 10-point bold face type: "The State of Texas has not reviewed and does not endorse, approve, recommend, or sponsor any business opportunity. The information contained in this disclosure has not been verified by the state. If you have any questions about this investment, see an attorney before you sign a contract or agreement." Nothing except the title and required statement shall appear on the cover sheet. The disclosure document shall contain the following information:
(1) the name of the seller, whether the seller is doing business as an individual, partnership, corporation, or other business entity; the names under which the seller has done, is doing, or intends to do business; and the name of any parent or affiliated company that will engage in business transactions with the purchasers or who takes responsibility for statements made by the seller;
(2) the names, addresses, and titles of the seller's officers, directors, trustees, general partners, general managers, principal executives, stockholders owning more than 20 percent of the stock shares
of the seller, and any other persons charged with the responsibility for the seller's business activities relating to the sale of business opportunities;
(3) the length of time the seller has:
(A) sold business opportunities; and
(B) sold business opportunities involving the products, equipment, supplies, or services currently being offered to the purchaser;
(4) a full and detailed description of the actual services that the business opportunity seller undertakes to perform for the purchaser;
(5) a copy of a current (not older than 13 months from date prepared) financial statement of the seller prepared according to generally accepted accounting principles, updated to reflect material changes in
the seller's financial condition;
(6) if training is promised by the seller, a complete description of the training, the length of training, and the cost or travel and lodging expenses of that training, which cost or expense the purchaser will be
required to incur;
(7) if the seller promises services to be performed in connection with the placement of equipment, products, or supplies at a location, the full nature of those services as well as the nature of the agreements to be made with the owners or managers of the location where the purchaser's equipment, product, or supplies will be placed;
(8) if the business opportunity seller is required to secure a bond or establish a trust account, either of the following statements:
(A) "As required by Texas law, the seller has secured a bond issued by __________, a surety company authorized to do business in this state. Before signing a contract to purchase this business opportunity, you
should confirm the bond's status with the surety company."; or
(B) "As required by Texas law, the seller has established a trust account with __________. Before signing a contract to purchase this business opportunity, you should confirm with the bank or savings institution the current status of the trust account.";
(9) if the seller is required to deliver to the purchaser the product, equipment, or supplies necessary to begin substantial operation of the business and states a definite or approximate delivery date for the
same, the following statement: "If the seller fails to deliver the product, equipment, or supplies necessary to begin substantial operation of the business within 45 days of the delivery date stated in your contract, you may notify the seller in writing and cancel your contract.";
(10) if the seller makes any statement concerning sales or earnings that may be made through this business opportunity, a statement disclosing:
(A) the total number of purchasers of business opportunities involving the product, equipment, supplies, or services being offered who to the seller's knowledge have actually achieved sales of or received earnings
in the amount or range specified, within three years prior to the date of the disclosure statement;
(B) the total number of purchasers of business opportunities involving the product, equipment, supplies, or services being offered within three years prior to the date of the disclosure statement;
(11) a statement disclosing which, if any, of the persons listed in
Subdivisions (1) and (2) of this article:
(A) has, at any time during the previous seven fiscal years, been convicted of a felony or pleaded nolo contendere to a felony charge if the felony involved fraud, embezzlement, fraudulent conversion, or
misappropriation of property;
(B) has, at any time during the previous seven fiscal years, been held liable in a civil action resulting in a final judgment, or has settled out of court any civil action or is a party to any civil action involving allegations of fraud, embezzlement, fraudulent conversion, or misappropriation of property or the use of untrue or misleading representations in an attempt to sell or dispose of real or personal property or the use of unfair, unlawful, or deceptive business practices; or
(C) is subject to any currently effective injunction or restrictive order relating to business activity as a result of an action brought by a public agency or department; such statement shall set forth the identity and location of the court or agency, the date of conviction, judgment, or decision, the penalty imposed, the damages assessed, the terms of the settlement or the terms of the order, and the date, nature, and issuer of each such order or ruling;
(12) a statement disclosing who, if any, of the persons listed in Subdivisions (1) and (2) of this article at any time during the previous seven fiscal years has:
(A) filed in bankruptcy;
(B) been adjudged bankrupt;
(C) been reorganized due to insolvency;
(D) been a principal, director, executive officer, or partner of any other person that has so filed or was so adjudged or reorganized, during or within one year after the period that such person held such position in relation to such other person; if so, the name and location of the person having so filed or having been adjudged or reorganized, the date thereof, or any other material facts relating thereto, shall be set forth;
(13) a copy of the business opportunity contract which the seller uses as a matter of course and which is to be presented to the purchaser at closing.

Art. 5069-16.16. Voluntary Termination of a Business Opportunity Registration
(a) The principal seller of a registered business opportunity may voluntarily terminate its registration with the secretary of state when any of the following conditions exists:
(1) the registered business opportunity will no longer be offered in Texas;
(2) the registered business opportunity has been changed to a point where the definition of a business opportunity set forth in Article 16.05 of this chapter [FN1] no longer defines the business opportunity being offered;
(3) the registered business opportunity now falls within one of the exemptions listed in Article 16.06 of this chapter; [FN2] or
(4) the principal seller offering the registered business opportunity has ceased to exist as a legal entity.
(b) The secretary of state may charge a reasonable fee to cover the costs incurred as a result of the filing herein required.

Art. 5069-16.10. Writing Requirement
Every business opportunity contract shall be in writing and shall be subject to the provisions of this statute. A copy of the fully completed contract and all other documents the seller requires the purchaser to sign shall be given to the purchaser at the time he signs the contract.
Art. 5069-16.11. Business Opportunity Contract
Every business opportunity contract shall set forth the following in 10-point type or equivalent size, if handwritten:
(1) the terms and conditions of payment including the initial consideration, additional payments, and down payment required;
(2) a full and detailed description of the acts or services the seller will undertake to perform for the purchaser;
(3) the seller's principal business address and the name and the address of its agent in the State of Texas authorized to receive service of process;
(4) the delivery date, or when the contract provides for staggered delivery times to the purchaser, the approximate delivery date of those products, equipment, or supplies the seller is to deliver to the purchaser's home or business address or are to be placed by the seller at locations owned or managed by persons other than the purchaser;
(5) a complete description of the nature of the "buy-back" or "security" arrangement, if the seller has represented orally or in writing when selling or leasing, soliciting, or offering a business opportunity that there is a "buy- back" or that the initial consideration is "secured."

Art. 5069-16.13. Record Keeping
Every seller shall at all times keep and maintain a complete set of books, records, and accounts of business opportunity sales made by the seller. All documents relating to each specific business opportunity  sold or leased shall be maintained for four years after the date of the business opportunity contract.

Art. 5069-16.14. Bond, Trust Account, or Letter of Credit Required
If the business opportunity seller makes any of the representations set forth in Subsection (B) of Section (2) of Article 16.05 of this chapter, [FN1] or otherwise represents that the buyer is assured of making a profit from the business opportunity in question, the principal seller must either have obtained a surety bond by a surety company authorized to do business in this state, have established a trust account, or obtained an irrevocable letter of credit. The amount of the bond, trust account, or irrevocable letter of credit, shall be in an amount not less than $25,000. The bond, trust account, or irrevocable letter of credit shall be in the favor of the State of Texas. Any person who is damaged by any violation of this chapter, or by the seller's breach of contract for the business opportunity sale or of any obligation arising there from may bring an action against the bond, trust account, or irrevocable letter of credit to recover damages suffered; provided that the aggregate liability of the surety, trustee, or issuer shall be only for actual damages and in no event shall exceed the amount of the bond, trust account, or irrevocable letter of credit.

Art. 5069-16.15. Prohibited acts and remedies
(a) A business opportunity seller shall not:
(1) fail to comply with any provision of this statute; or
(2) employ any representation, device, scheme, or artifice to deceive a purchaser; or
(3) make any untrue statement of a material fact or omit to state a material fact in connection with the documents and information required to be furnished to the secretary of state or prospective purchaser; or
(4) represent that the business opportunity provides or will provide income or earning potential of any kind unless the seller has documented data to substantiate the claims of income or earning potential and
discloses this data to the prospective purchaser at the time such representations are made; or
(5) make any claim or representation in advertising or promotional material or in any oral sales presentation, solicitation, or discussion between the seller and the prospective purchaser, which is inconsistent with the information required to be disclosed by this statute.
(b) Any violation of the provisions of this chapter is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Deceptive Trade Practices-Consumer Protection Act, Subchapter E, Chapter 17, Title 2 of the Business & Commerce Code, as amended. Any public or private right or remedy set forth in Chapter 17 of the Business & Commerce Code may be used to enforce the provisions of this chapter.
(c) The attorney general may review the required disclosure statements filed with the secretary of state pursuant to Articles 16.08 and 16.09. [FN1] If a disclosure statement fails to comply with the requirements of this Act in any way, the attorney general may:
(1) notify the secretary of state and the seller in writing of such deficiency; the secretary of state shall attach a copy of the notice
from the attorney general to the front of the disclosure statement; upon inquiry of the status of such a disclosure statement, the secretary of state shall disclose that a statement has been filed but that its
correctness has been questioned by the attorney general's office; and
(2) file suit to enjoin a seller from doing business until such failure to comply has been corrected.
(d) In construing this chapter, a court to the extent possible shall follow the interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act
(15 U.S.C. Section 5(a)(1) of the Federal Trade Commission.
(e) A person who became a seller under this chapter solely because of amendments to this chapter by Chapter 162, Acts of the 69th Legislature, Regular Session, 1985, and who complied with this chapter on or before September 24, 1985, or forwarded proper notices claiming exemption from the chapter that were accepted by the secretary of state on or before that date are considered to have timely complied with this chapter and timely submitted those notices.

Art. 5069-16.16. Voluntary Termination of a Business Opportunity Registration
(a) The principal seller of a registered business opportunity may voluntarily terminate its registration with the secretary of state when any of the following conditions exists:
(1) the registered business opportunity will no longer be offered in Texas;
(2) the registered business opportunity has been changed to a point where the definition of a business opportunity set forth in Article 16.05 of this chapter [FN1] no longer defines the business opportunity
being offered;

(3) the registered business opportunity now falls within one of the exemptions listed in Article 16.06 of this chapter; [FN2] or
(4) the principal seller offering the registered business opportunity has ceased to exist as a legal entity.
(b) The secretary of state may charge a reasonable fee to cover the costs incurred as a result of the filing herein required.

Texas says see: Federal Regulations 16 C.F.R. Section 436.2(a)(1)(i)  This is listed under the Federal Trade Commission Section and the definitions that exempt MLM companies from filling out all the massive paper work under the law.