11-06-2025
Complying with the FTC's Business Opportunity Rule
Mark Pestronk
Q: An industry colleague told me that our new host agency program needs to comply with the Business Opportunity Rule of the Federal Trade Commission (FTC). Is that correct? If so, what does the rule require us to do? Would we have to comply if we just have a small number of independent contractors? Do you think it is likely that the Trump-controlled FTC is going to repeal the rule as part of its business deregulation policies?
A: If, like most agencies, you are looking to retain travel advisors who are already in the business and already have at least some clients of their own, you do not have to worry about the FTC rule. On the other hand, if you are trying to attract people new to the business, and you're planning to charge a fee of any kind or amount, train them and refer potential clients to them, you will have to comply with the FTC rule.
The rule requires you to provide to a one-page, written disclosure document and certain attachments containing five items of information at least seven calendar days before a prospect may sign any documents or pay any money to you. There is no filing or approval process with the FTC or other federal agency.
The five items of information are details about your agency's identity, substantiation of any earnings claims, details of legal actions against the you and affiliates, your cancellation or refund policies and a list of names and phone numbers of "buyers."
The list must include at least 10 buyers in the past three years. If fewer than 10 have signed up, you have to list all of them.
You can find FTC's sample form by going to and clicking on "FTC Business Opportunity Form."
You can be exempt from the business opportunity rule if you don't charge any fees at all and simply rely on the commission split. You could also be exempt if you don't ever provide ICs with leads or referrals.
A common misunderstanding is that the rule only applies if you were planning to charge at least $500 during the first six months of the relationship. Actually, there is no minimum threshold; if you charge a fee of any kind, the rule applies if you meet the other requirements.
The $500 amount is relevant to the much more complex Franchise Rule of the FTC. If your host-IC relationship qualifies as a franchise because you are licensing your name and providing significant marketing or operational assistance, and if you charge at least $500 during the first six months, you have to have a franchise prospectus that typically runs more than 50 pages and is full of more detailed disclosures.
Twenty-five states have their own business opportunity rules, and you have to comply with them if a prospective IC resides in one of them. Nineteen of these states require some form of registration or notice to the state before offering business opportunities to residents of these states.
Project 2025 proposes to abolish the FTC altogether, so the Business Opportunity Rule may go away in the coming years.
