The FTC Business Opportunity Rule and vending locators, explained

What is the FTC Business Opportunity Rule?

The FTC Business Opportunity Rule is the federal trade regulation at 16 CFR Part 437 that makes covered sellers of money-making ventures hand buyers a standard one-page disclosure document, back every earnings claim in writing, and avoid a list of specific misrepresentations. It was published as a final rule on December 8, 2011, took effect March 1, 2012, and its text has not changed since.

Each core section makes a breach both a violation of the Rule and an unfair or deceptive practice under Section 5 of the FTC Act. The Commission can seek civil penalties for a violation committed with actual or fairly implied knowledge that it is prohibited (15 U.S.C. §45(m)(1)(A)), up to $53,088 per violation under 16 CFR 1.98 as of October 1, 2026.

The complaints continue: in the FTC’s 2024 Consumer Sentinel Data Book, still the latest edition, the business and job opportunities category held 126,217 fraud reports and $751 million in reported losses.

When does the Rule cover a vending or location deal?

The Rule covers a deal only when three conditions are all met: a seller solicits you to enter a new business, you make a required payment, and the seller says, in writing or out loud, that it or someone it names will provide locations for equipment you own or pay for, find you outlets or accounts, or buy back what you produce. Each condition has its own definition.

The location prong is the one written for vending. It reaches locations for devices “owned, leased, controlled, or paid for by the purchaser,” which describes a machine you bought yourself. The promise can be express or implied, oral or written, so a sentence on a sales call counts as much as a line in a brochure. For a vending buyer, the first two elements deserve the closest reading.

What counts as a new business and a required payment?

A new business, in the Rule’s words, is one the buyer “is not currently engaged” in, or “a new line or type of business.” A required payment counts what you owe the seller or an affiliate by contract or by practical necessity, including money routed through a third party, but not reasonable inventory bought at bona fide wholesale prices.

The “new line or type of business” wording reaches experienced buyers. The FTC’s own example in 2011 was an existing tire business owner buying a vending machine route, on the reasoning that a veteran businessperson may need the Rule’s protection as much as a novice. For an operator who already runs machines and is buying placements for more of them, how that wording applies is a fact-specific question.

There is no minimum price. The interim rule reached only ventures costing $500 or more, and the FTC dropped that floor in the final rule after commenters argued that sellers could price offers just under it (76 FR 76821). A $500 line survives in one place: Part 437 skips franchises covered by the Franchise Rule, except those exempted from it because required payments total less than $500 or nothing is in writing (16 CFR 437.8).

Where do vending locators fit in the Rule?

Vending locators appear in the Rule by name. Its definition of “providing locations” includes requiring, recommending or suggesting a locator, handing over a list of locator or lead-generating companies, and collecting a fee on a locator’s behalf, so a seller cannot step outside the Rule by sending the location work to a third party (16 CFR 437.1(m)).

The FTC explained why in 2011. Its Statement of Basis and Purpose says the term “designated person” was added to close a loophole: a vending route seller cannot avoid the Rule by promising that a particular locator will place the machines, because the referral alone brings the sale within it. The same document says a payment counts whether it goes to the seller directly or “indirectly through a third party, such as a broker, lead generator, or locator.”

Two limits matter. First, the definition excludes “advertising and general advice about business development and training,” while still covering a seller that “otherwise” helps you obtain your own locations; where general advice ends and location help begins is a fact question. Second, the FTC wrote that brokers, locators and suppliers involved in a seller’s offer have no duty to prepare the disclosure document; that responsibility rests with the seller.

A locator that sells its own service directly (the service models are compared in how vending machine locators work) raises a separate question: whether it is itself a “seller” of a “business opportunity” under the three-part test. The answer depends on facts such as what the buyer pays and whether the buyer is entering a new line of business. That is a question for counsel in each case, and Fine Print does not apply it to any company.

How did the FTC treat vending location promises before Part 437?

Before Part 437, the Franchise Rule covered business opportunities, and two FTC staff advisory opinions applied it to vending sellers who promised help with locations. Opinion 95-10 (December 8, 1995) said the location element needs only that a seller “more than nominally assist” in finding sites.

Opinion 98-1 (January 6, 1998), written for a locator that also offered machines, saw “no practical distinction” between that and an equipment seller promising locations. “A tie-in arrangement is not a prerequisite to Rule coverage,” it said, and the rule applied “even if such assistance is of no use to the Operator.” It added that a locator supplying only leads, with no equipment, would fall outside that rule. Both are informal staff views on a rule with different elements, so they do not settle coverage under Part 437.

What must the one-page disclosure document show?

The disclosure document is a single page in the FTC’s set format that names the seller, its address, phone number and salesperson, answers yes or no on legal actions in the past 10 years, a cancellation or refund policy and earnings claims, then lists references. Every “yes” requires an attachment, and you sign a receipt copy confirming the date you got it.

What each box means, under 16 CFR 437.3:

• Legal actions. Civil or criminal actions for misrepresentation, fraud, securities violations or unfair or deceptive practices, against the seller, its affiliates, prior businesses or key personnel, within 10 years. A “yes” requires each case caption, court and filing date.
• Cancellation or refund policy. If one exists, every material term goes in an attachment. Failing to honor a refund once you meet those terms is a separate violation (16 CFR 437.6(l)); the guide to refundable deposit terms covers what they tend to say.
• Earnings. If the seller or salesperson stated or implied a specific level of sales, income or profit, an earnings claim statement must be attached.
• References. Name, state and phone number for every buyer from the past 3 years, or at least the 10 who live nearest you, with a notice that your own details can be given to future buyers; how to check a vending locator’s record covers what to ask them.

You must have the form at least 7 calendar days before you sign a contract or pay anything, whichever comes first (16 CFR 437.2). Nothing else may be added to the form, and an electronic version may carry only scroll bars and internal links, no video or pop-ups (16 CFR 437.6(c)). A sale conducted in Spanish needs the Spanish form; other languages need an accurate translation (16 CFR 437.5).

How does the Rule handle earnings claims?

An earnings claim is any statement, spoken, written or visual, that conveys a specific amount or range of past or possible sales, income or profit, including charts, calculations and lines such as “earn your investment back within one year.” A covered seller may make one only with a reasonable basis, written substantiation in hand, and a separate document titled “EARNINGS CLAIM STATEMENT REQUIRED BY LAW” (16 CFR 437.4).

That statement must give the claim, the dates the earnings were achieved, the number and percentage of all buyers before the end date who earned at least that much, any ways those buyers differ from you (such as location), and a promise that the substantiation is available on request. The percentage line is the one to read first.

A claim in an ad, website or social post must carry, right beside it, the dates and the number and percentage of buyers who reached the figure (16 CFR 437.4(b)). Industry averages need written proof that they reflect, or do not exceed, the typical experience of the seller’s own buyers, and material changes must reach you in writing before you sign or pay (16 CFR 437.4(c) and (d)).

For a vending buyer, a monthly sales figure for a venue, a projected take per machine or a payback period is the kind of statement the definition describes. The FTC’s buyer guidance adds that hedges such as “up to” do not turn a figure into something other than an earnings claim, and that you can demand the proof (FTC).

Sellers in this market publish their own warnings about the same practice. PinPoint Vending, a vending locator, puts inflated income claims first among nine red flags and points to FTC matters including a DVD-rental machine scheme that collected $28,000 to $37,500 per machine on claims of $60,000 to $80,000 a year, a $250,000 settlement in 2009, and Miami vending franchisors barred in 2004 from marketing business ventures.

What does the Rule forbid a seller or locator to say?

Section 437.6 lists 18 forbidden practices that apply on top of the disclosure duty. For vending buyers, the most relevant bar misrepresenting costs, assistance, refund terms and territories, using references with undisclosed ties, and overstating the odds that the seller, a locator or a lead generator will find locations for the buyer (16 CFR 437.6).

The FTC’s 2011 discussion of section (j) names two kinds of statement it reaches: claims that a particular locator succeeds in finding locations, and claims that venues have already signed contracts. Misstating either is barred because such claims, in the FTC’s words, “foster the expectation that a profitable market exists.” Warning signs of this kind, described by behavior, are collected in the locator red-flag list.

What does the Rule leave out, and is it changing?

The Rule licenses, registers and approves no one: the FTC’s form itself says the agency “has not seen this completed form or checked that the information is true.” Part 437 also leaves room for state laws that give buyers equal or greater protection, such as registering disclosure documents, as long as those disclosures come in a separate state document (16 CFR 437.9(b)). The federal text has not changed since 2011, and a review has been open since 2022.

The FTC opened that review with an advance notice published November 25, 2022, asking whether to extend coverage to business coaching, work-from-home programs, investment coaching and e-commerce opportunities; comments closed January 31, 2023. On January 13, 2025, the Commission voted 3–2 to propose extending the Rule to “other money-making opportunities, such as business coaching and investment opportunities,” under a new name, the Business and Money-Making Opportunity Rule. As of October 5, 2026, that proposal has not appeared in the Federal Register.

The Commission’s regulatory agenda of August 14, 2026 still lists the Business Opportunity Rule among its current rulemakings, next to a proposed Earnings Claims Rule (16 CFR 462) that began with a March 2022 advance notice. Until an amendment appears on eCFR, the 2011 text governs.

State laws add more: Fine Print verified business opportunity statutes in 25 states, several with registration, bonds or cancellation windows, and the state-by-state guide links each one. The FTC enforces Part 437 itself; recovering your own money runs through your contract, your card issuer and those state laws, as set out in how to get a refund from a vending locator.

How should a vending buyer use the Rule before paying a locator?

A vending buyer can use the Rule as a checklist before paying anyone who promises locations: ask in writing whether the seller provides the federal disclosure document, get it at least 7 calendar days before signing or paying, and test its references and any earnings figure yourself. A refusal to answer in writing is itself information.