Business opportunity rule

NAA filed comments in July 2006 with the Federal Trade Commission (FTC) on its proposal to change the “business opportunity rule.” The FTC’s proposed rule would have required businesses to inform agents of the inherent risks of sales arrangements. Compliance with this proposed rule would have significantly increased newspapers’ cost of doing business, as newspapers would have had to complete and distribute thousands of disclosure statements prior to entering into agreements with independent contractors. NAA’s comments stated that the industry was unaware of any evidence of a consumer protection problem with the buy-sell arrangement that the majority of our carriers have successfully utilized for more than a century.

After reviewing more than 17,000 comments, the FTC announced on March 18 it was proposing to narrow the scope of the business opportunity rule. The Revised Notice of Proposed Rulemaking cites NAA’s comments and states that covering the relationship between newspapers and independent carriers was unintended. In addition, “the Commission has narrowed the proposed definition of the term ‘business opportunity’ to exclude from coverage distribution arrangements in which the only required payment is for reasonable amounts of inventory at bona fide wholesale prices.” Newspapers have relied upon this “safe harbor” language for decades, and NAA fought to have it included in the revised rule. After a significant wait, this is an excellent result.

First Published: April 22, 2008