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Texas Business & Commerce Code - Section 41.004. Business Opportunity; Exceptions

Legal Research Home > Texas Lawyer > Business & Commerce Code > Texas Business & Commerce Code - Section 41.004. Business Opportunity; Exceptions

§ 41.004. BUSINESS OPPORTUNITY;  EXCEPTIONS.  (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 initial consideration paid by the 
purchaser;  and
		(2)  the seller will:                                                         
			(A)  provide locations or assist the purchaser in 
finding locations 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, 
supplies, or equipment purchased or a product made, produced, 
fabricated, grown, or bred by the purchaser using in whole or in 
part the product, supplies, equipment, 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 contract or agreement in which a retailer of 
goods or services sells 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 the retail business 
establishment as a department or division of the retail business 
establishment;
		(3)  a transaction regulated by the Motor Vehicle Board 
of the Texas Department of Transportation, Texas Department of 
Licensing and Regulation, Texas Department of Insurance, or Texas 
Real Estate Commission if 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 equipment, products, and supplies or performs 
services:
			(A)  that are not supplied by the seller;  and                               
			(B)  that the purchaser does not use with the 
equipment, products, supplies, or services of the seller;
		(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 at least $25 million 
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 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. 
Section 436.2(a) 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 do 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). 

Added by Acts 1997, 75th Leg., ch. 1008, § 5, eff. Sept. 1, 1997.          

Last modified: August 10, 2007