Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
Business opportunities refer to any opportunities for people to invest in existing businesses or start their own business to sell a service or product of a third party. This means that there is an ongoing relationship between those offering the business opportunities and the new investor/business owner.
Rule 20.8 states the information that marketing communications for business opportunities should contain, including the name and address of the marketer, a clear description of the work, likely earnings and a statement about financial investment. Although it need not be in the initial ad, all that information must be available, without charge, before participants commit to the scheme. In November 2003, the ASA decided that, because the franchise fee was stated in the initial ad and investors would receive a prospectus before commitment, the marketer did not need to include its full name and address in the initial ad (Support Aid Solutions, 19 November 2003). The ASA nevertheless concluded that the marketer had not substantiated that franchisees were likely to achieve the claimed earnings.
As before, those marketing business opportunities must make clear the financial commitment required to partake in the scheme. Whilst there is no obligation under the Code to include exact figures or percentages in the initial ad, this should be made fully clear in the follow-up literature and before the new investor commits to the venture.
Advertisers should also present a realistic depiction of what new investors can expect to earn, and hold evidence that this is the case. The ASA has upheld many complaints about business opportunities where the expected earnings were greatly exaggerated (GB Associates Ltd, 2 February 2005; Direct Route Insight Ltd, 13 October 2004, and Sensortrol Ltd, 28 May 2003).
Those looking to advertise multi-level marketing (MLM) opportunities are reminded that they are also subject to these rules. See our specific Multi-Level Marketing guidance for more.