Form 2701--General Information (Business Opportunity Registration) The attached form is designed to meet minimal statutory filing requirements pursuant to the relevant code provisions. This form and the information provided are not substitutes for the advice and services of an attorney. Commentary The offering or sale of business opportunities in Texas is governed by the Business Opportunity Act, chapter 51, Texas Business & Commerce Code, and the secretary of state's administrative rules, title 1, chapter 97 of the Texas Administrative Code. Before an offering or sale of a business opportunity in Texas, the principal seller must register the business opportunity with the secretary of state. Tex. Bus. & Comm. Code � 51.051. A registration is effective the date the completed registration and filing fee are received by the secretary of state. The information provided in the registration must be updated periodically with the secretary of state. The list of individual sellers must be updated every six months and the disclosure statement must be updated annually and whenever there is a material change. The filing fee for any update is $25. Definition. Section 51.003 of the Business Opportunity Act defines "business opportunity" as follows: (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 amount of the initial consideration the purchaser paid; and (2) the seller will: (A) provide a location or assist the purchaser in finding a location 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, equipment, or supplies purchased or products made, produced, grown, or bred by the purchaser using wholly or partly the products, equipment, supplies, 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 sale by a retailer of goods or services under a contract or other agreement to sell 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 a retail business establishment as a department or division of the retail business establishment; (3) a transaction that is: (A) regulated by the Texas Department of Licensing and Regulation, the Texas Department of Insurance, the Texas Real Estate Commission, or the director of the Motor Vehicle Division of the Texas Department of Transportation; and (B) 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 products, equipment, or supplies or performs services: (A) that are not supplied by the seller; and (B) that the purchaser does not use with the seller's products, equipment, supplies, or services; (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: Form 2701 Instruction Page 1 � Do not submit with filing. American LegalNet, Inc. www.FormsWorkFlow.com (A) has a net worth of $25 million or more 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 business opportunity 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 transact business; and (iii) the franchisor's principal business address. As a ministerial filing office, the Office of the Secretary of State cannot make a determination as to whether an activity constitutes a "business opportunity" under the statute. For assistance in determining whether a particular offering or sale must be registered, please consult your private attorney. Instructions for Form Business Opportunity and Seller Information: Provide the names of the business opportunity, the principal seller, and any individuals who sell or will sell the business opportunity for the principal seller. The principal seller is the person registering the business opportunity. The address of the seller's principal place of business is required. It is requested that you provide a telephone number. The registered agent and office information is also requested so the business opportunity can be sent notice regarding its registration status, including involuntary termination. Disclosure Statement and Proof of Security: A disclosure statement or acceptable similar document and proof of security (if required) must be submitted with the registration. Acceptable similar documents include documents required by the Texas State Securities Board, Securities and Exchange Commission, and Federal Trade Commission so long as they contain all of the information required by �� 51.152-51.164. Sample Cover Sheet and Disclosure Statement Form: Section 51.152, Tex. Bus. & Comm. Code, requi