In order to be a business opportunity venture under the FTC rule, four elements must be present:
1. The individual who buys a business opportunity, often referred to as a licensee or franchisee, must distribute or sell goods or services supplied by the licenser or franchisor.

2. The licensor or franchisor must help secure a retail outlet or accounts for the goods and services the licensee is distributing or selling.

3. There must be a cash transaction between the two parties of at least $500 prior to or within six months after the licensee or franchisee starts the business venture.

4. All terms and conditions of the relationship between the licensor and the licensee must be stated in writing.

Advantages of owning a Business Opportunity

A good business opportunity gives you the freedom to make your own decisions, while still providing you with some training and support from the parent company.

You can find a wide range of opportunities that have the potential for earning a realistic full-time income.

There are also many opportunities to select from which will provide you a part-time or supplementary income.

Part-time biz ops can be run concurrently with a full-time job, another business or while child rearing.

Generally, business opportunities have a lower purchase price than franchises.

Buying a biz op allows you to open a business with much of the legwork already done for you. A good biz op will provide you with a business plan, marketing strategy, operating procedures, training, support and a great many other resources you will not have to find on your own.

By working from home you have lower overhead.

Working from home also allows you to have a more flexible schedule.

Buying a biz op is buying your own business so, if you build equity in it, you can sell it later at a profit.

Biz ops allow you to be creative in the way you run and market your business. Unlike franchising, you will not have to follow a strict set of procedures imposed by the parent company.

Biz ops allow you to be flexible in structuring your business to meet the specific needs of clients, customers and the market in general.

Biz ops are available for a wide range of products and services, so you have many more choices for finding something you can feel passionate about.

With a biz op, your success is often not as intimately tied into the parent company as in franchising and MLM. If the parent is not doing well, or even goes under, in most cases you can continue operating.

Disadvantages of owning a Business Opportunity

Unlike with franchising, there are no specific laws governing biz ops as an industry group. Seller Assisted Marketing Plan (SAMP) laws and other laws regulating sales in general do exist, but they are not nearly as specific to biz ops as an industry as the Franchising Rule is to franchising.

Laws that do apply to biz ops vary greatly from state to state and fall inder different agencies' jurisdictions. If you run into a problem, it can be confusing to trach these laws down and find the appropriate agency to help you resolve it.

There are no trade or professional organizations specific to the business opportunity industry.

Because there is little regulation, there is an unending supply of scams and dishonest companies in the biz op world - so beware! There is even a book, Biz-Op: How to Get Rich With "Business Opportunity" Frauds and Scams, written specifically by Bruce Easly to tell people how to create their own biz op scams.

Because the guidelines supplied by many parent companies are not nearly as comprehensive as in franchising and MLM, inexperienced businesspeople may have greater difficulties at first.

Biz ops nearly never include exclusive territories.

Often you must find your own sources for vendors, distributors and essential services. This cannot take up your time and resources.

Usually you must create, and pay for, all advertising and marketing materials yourself, although your biz op should provide marketing plans and ideas or samples.

Most biz ops do not have regional or national recognition for their products or services.

As in all business, there is a chance you will fail. It is a risk. Are you prepared to lose the money and time you invest in the business?

You may not make as much money as you expect. Are you ready to make do with less for an indefinite period of time?

You may have to invest long hours for little return, especially in the beginning. Are you ready to work harder than you now do?

Having your own business is physically and emotionally taxing. Are you up to the challenge?

Working from your home requires self-discipline and self-motivation. Can you set goals and follow through?

Unlike having a job, there are absolutely no guarantees in running you own business. Are you ready for the uncertainty?

Having your own business means not having any basic-level employer=provided benefits such as health insurance, unemployment insurance, workers' compensation insurance or the employer's share of Social Security payments. You will be responsible for providing these yourself from your earnings.

Many biz ops are sold using high-pressure sales techniques. Do not get swept up in the momentary excitement of a dramatic sales pitch.

Many biz ops are sold by biz op brokers who do not actually work in the company they are selling. They may view their job as that of selling to anyone who will buy, whether the business would be well suited to the buyer or not.

Excerpt from Home Businesses You Can Buy: The Definitive Guide to Exploring Franchises, Multi-Level Marketing, and Business Opportunities Plus : How to Avoid Scams

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