The answers to our Frequently Asked Questions are provided for informational purposes and are not intended to provide legal advice or to substitute for the advice of an attorney. If you have specific legal questions, consult your attorney.
The Secretary of State does not decide if a person must register. The Business Opportunity Act ("Act") defines a "Business Opportunity," lists exemptions, and provides guidelines for registration. It is the seller's responsibility to determine whether the seller must register. A seller may enlist the assistance of a private attorney.
The principal seller of a business opportunity registers with the Secretary of State by filing: 1) a copy of the disclosure statement that includes the information required by the Act, and 2) a list of the names and resident addresses of all salespersons. The filing fee for registration is $195. Please refer to Form 2701 (PDF) for further information and instructions.
The Act specifies that if a business opportunity seller makes certain representations, the seller must: 1) obtain a surety bond, 2) establish a trust account, or 3) obtain an irrevocable letter of credit. The bond, trust account, or irrevocable letter of credit must be payable in favor of the state and must be in the amount of $25,000.00. Please refer to Form 2702 (PDF) or Form 2705 (PDF) for further information.
No. The Secretary of State is simply the filing office for the documents required by the Act. Enforcement of the registration requirements and/or violations of the Act are the jurisdiction of the Texas Attorney General. A person who has been injured by the actions of a business opportunity seller may file a complaint with the Consumer Protection Division of the Attorney General's Office.
A franchisor is exempt from filing a Texas registration statement, if the franchisor complies in all material respects in the state of Texas with the disclosure requirements and prohibitions concerning franchising in the FTC regulations applicable to the franchisor. HOWEVER, prior to offering for sale or selling, the seller must file an exemption notice (PDF) with the Secretary of State. The filing fee for the exemption notice is $25.
Form 2703 (PDF), the form used for filing the exemption notice with the Secretary of State, requires the legal name of the franchisor claiming the exemption, a list of all names under which the franchisor does business or intends to do business, and the principal business address of the franchisor.
The exemption notice does not have a term or expiration date; it is a one-time filing. However, a franchisor should notify the Secretary of State in writing if the franchisor changes its principal business address. There is no fee for an address update.
The registration does not have a specific expiration date; however, additional filings are required by the Act in order to maintain a registration.
The filing fee for each update filing listed is $25. The Secretary of State has a cover sheet (PDF) that may be used when submitting the updated filings.
A registered seller of a business opportunity who does not file the required updates is delinquent and subject to termination of its registration.