Sec. 51.001.  SHORT TITLE.  This chapter may be cited as the Business Opportunity Act.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.002.  GENERAL DEFINITIONS.  In this chapter:

(1)  "Business opportunity contract" means an agreement that obligates or is intended to obligate a purchaser to a seller.

(2)  "Buy-back" or "secured investment" means a representation that implies a purchaser's payment is protected from loss.

(3)  "Equipment" includes electrical devices, video and audio devices, molds, display units, including display racks, and machines, including coin-operated game machines and vending and other machines that dispense products.

(4)  "Initial consideration" means the total amount a purchaser is obligated to pay under a business opportunity contract before or at the time products, equipment, supplies, or services are delivered or within six months after the date the purchaser begins operation of the business opportunity plan.  The term means the total sale price if the contract states a specific total sale price for purchase of the business opportunity plan and the total sale price is to be paid as a down payment and one or more additional payments.  The term does not include the not-for-profit sale of sales demonstration materials, samples, or equipment for not more than $500.

(5)  "Marketing program" means advice or training that a seller or a person recommended by a seller gives to a purchaser regarding the sale of products, equipment, supplies, or services.  The term includes the preparation or provision of:

(A)  a brochure, pamphlet, or advertising material, including promotional literature;

(B)  training regarding the promotion, operation, or management of a business opportunity; or

(C)  operational, managerial, technical, or financial guidelines or assistance.

(6)  "Product" includes tangible personal property.

(7)  "Purchaser" means a person who becomes or is solicited to become obligated under a business opportunity contract.

(8)  "Seller" means a principal or agent who sells or leases or offers to sell or lease a business opportunity.

(9)  "Services" includes any assistance, guidance, direction, work, labor, or other services provided by a seller to initiate or maintain a business opportunity.

(10)  "Supplies" includes materials used to make, produce, grow, or breed a product or item.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.003.  DEFINITION OF BUSINESS OPPORTUNITY.  (a)  In this chapter, "business opportunity" means a sale or lease for an initial consideration of more than $500 of products, equipment, supplies, or services that will be used by or for the purchaser to begin a business in which the seller represents that:

(1)  the purchaser will earn or is likely to earn a profit in excess of the amount of the initial consideration the purchaser paid; and

(2)  the seller will:

(A)  provide a location or assist the purchaser in finding a location for the use or operation of the products, equipment, supplies, or services on premises that are not owned or leased by the purchaser or seller;

(B)  provide a sales, production, or marketing program; or

(C)  buy back or is likely to buy back products, equipment, or supplies purchased or products made, produced, grown, or bred by the purchaser using wholly or partly the products, equipment, supplies, or services that the seller initially sold or leased or offered for sale or lease to the purchaser.

(b)  In this chapter, "business opportunity" does not include:

(1)  the sale or lease of an established and ongoing business or enterprise that has actively conducted business before the sale or lease, whether composed of one or more than one component business or enterprise, if the sale or lease represents an isolated transaction or series of transactions involving a bona fide change of ownership or control of the business or enterprise or liquidation of the business or enterprise;

(2)  a sale by a retailer of goods or services under a contract or other agreement to sell the inventory of one or more ongoing leased departments to a purchaser who is granted the right to sell the goods or services within or adjoining a retail business establishment as a department or division of the retail business establishment;

(3)  a transaction that is:

(A)  regulated by the Texas Department of Licensing and Regulation, the Texas Department of Insurance, the Texas Real Estate Commission, or the director of the Motor Vehicle Division of the Texas Department of Motor Vehicles; and

(B)  engaged in by a person licensed by one of those agencies;

(4)  a real estate syndication;

(5)  a sale or lease to a business enterprise that also sells or leases products, equipment, or supplies or performs services:

(A)  that are not supplied by the seller; and

(B)  that the purchaser does not use with the seller's products, equipment, supplies, or services;

(6)  the offer or sale of a franchise as described by the Petroleum Marketing Practices Act (15 U.S.C. Section 2801 et seq.) and its subsequent amendments;

(7)  the offer or sale of a business opportunity if the seller:

(A)  has a net worth of $25 million or more according to the seller's audited balance sheet as of a date not earlier than the 13th month before the date of the transaction; or

(B)  is at least 80 percent owned by another person who:

(i)  in writing unconditionally guarantees performance by the person offering the business opportunity plan; and

(ii)  has a net worth of more than $25 million according to the person's most recent audited balance sheet as of a date not earlier than the 13th month before the date of the transaction; or

(8)  an arrangement defined as a franchise by 16 C.F.R. Part 436 and its subsequent amendments if:

(A)  the franchisor complies in all material respects in this state with 16 C.F.R. Part 436 and each order or other action of the Federal Trade Commission; and

(B)  before offering for sale or selling a franchise in this state, a person files with the secretary of state a notice containing:

(i)  the name of the franchisor;

(ii)  the name under which the franchisor intends to transact business; and

(iii)  the franchisor's principal business address.

(c)  The secretary of state shall prescribe the form of the notice described by Subsection (b)(8)(B).

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Acts 2009, 81st Leg., R.S., Ch. 548, Sec. 1, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch. 933, Sec. 3A.01, eff. September 1, 2009.

Sec. 51.004.  LIBERAL CONSTRUCTION AND APPLICATION.  (a)  This chapter shall be liberally construed and applied to:

(1)  protect persons against false, misleading, or deceptive practices in the advertising, offering for sale or lease, or sale or lease of business opportunities; and

(2)  provide efficient and economical procedures to secure that protection.

(b)  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), Federal Trade Commission Act (15 U.S.C. Section 45(a)(1)), and 16 C.F.R. Part 436 and their subsequent amendments.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.005.  BURDEN OF PROOF.  A person who claims to be exempt from this chapter has the burden of proving the exemption.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.006.  WAIVER.  A waiver of this chapter is contrary to public policy and void.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.007.  MAINTENANCE OF RECORDS.  (a)  A seller shall maintain a complete set of books, records, and accounts of business opportunity sales made by the seller.

(b)  A document relating to a business opportunity sold or leased shall be maintained until the fourth anniversary of the date of the business opportunity contract.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.008.  FILING FEE. The secretary of state may charge a reasonable fee to cover the costs incurred as a result of a filing required by Subchapter B or Section 51.003 or 51.251.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.009.  RULES. The secretary of state may adopt rules to administer and enforce this chapter.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

SUBCHAPTER B. REGISTRATION OF BUSINESS OPPORTUNITY

Sec. 51.051.  FILING OF DISCLOSURE STATEMENTS AND LIST OF SELLERS.  Before a sale or offer for sale, including advertising, of a business opportunity, the principal seller must register the business opportunity with the secretary of state by filing:

(1)  a copy of the disclosure statement required by Subchapter D, except as provided by Section 51.053; and

(2)  a list of the name and resident address of any individual who sells or will sell the business opportunity for the principal seller.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.052.  UPDATING OF INFORMATION ON FILE.  (a)  A copy of a disclosure statement filed under Section 51.051 must be updated through a new filing:

(1)  annually; and

(2)  when a material change occurs.

(b)  The list filed under Section 51.051(2) must be updated through a new filing every six months.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.053.  FILING OF DISCLOSURE DOCUMENT FROM OTHER REGULATORY AGENCY.  Instead of filing with the secretary of state a copy of a disclosure statement, a seller may file a copy of a similar document required by the State Securities Board, Securities and Exchange Commission, or Federal Trade Commission that contains all the information required to be disclosed by this chapter.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.01, eff. April 1, 2009.

Sec. 51.054.  FILING OF COPY OF BOND OR NOTIFICATION OF ACCOUNT.  A principal seller who is required to obtain a bond or establish a trust account under Subchapter C shall contemporaneously file with the secretary of state a copy of:

(1)  the bond; or

(2)  the formal notification by the depository that the trust acc