South Carolina law requires that all business opportunities be registered with the Secretary of State’s Office before a seller places advertisements or makes representations to prospective purchasers (S.C. Code of Laws §39-57-10 et seq.). A business opportunity is defined as the sale or lease of any product, equipment, supply or service which is sold to the purchaser for the purpose of enabling the purchaser to start a business, and for which the purchaser is required to pay the seller a fee which exceeds $250.00. The seller must also represent:
- that he will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases or other similar devices or currency-operated amusement machines or devices, on premises neither owned nor leased by the purchaser or seller; or
- that he will purchase any or all products made, produced, fabricated, grown, bred or modified by the purchaser using in whole or in part, the supplies, services or chattels sold to the purchaser; or
- that he guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid for the business opportunity; or that he will refund all or part of the price paid for the business opportunity, or repurchase any of the products, equipment, supplies or chattels supplied by the seller, if the purchaser is unsatisfied; or
- the seller will provide a sales program or marketing program which will enable the purchaser to derive income from the business opportunity which exceeds the price paid; provided, that this does not apply to the sale of a marketing program made in conjunction with the licensing of a registered trademark or service mark.
"Business opportunity" does not include the sale of ongoing businesses when the owner of those businesses sells or intends to sell any portion thereof; provided, a business is not considered an ongoing business unless it has filed income tax returns with the South Carolina Department of Revenue for at least one year; nor does it include the sale of assets or substantially all of the assets of an ongoing business; nor does it include payment for the not-for-profit sale of sales demonstration equipment, material or samples, or where the payment is made for product inventory sold to the purchaser at a bona fide wholesale price; nor does it include the sale or lease of any products, equipment, supplies, or services where the seller has a net worth on a consolidated basis, according to its most recent audited financial statement, of not less than ten million dollars.
S.C. Code of Laws §39-57-30 requires that the seller of every “business opportunity” must file a copy of the disclosure statement required by §39-57-30 before placing an advertisement or making other representations to prospective purchasers in the State. In order to comply with the law, the seller of every “business opportunity” must do the following:
1) Register with the Secretary of State’s Office on a biennial basis by completing the Registration and/or Biennial Renewal Application of Business Opportunity Form;
2) Submit a registration fee of $100;
3) Submit a financial statement that is not older than 13 months;
4) If the seller is required by statute (§39-57-40) to obtain a surety bond or establish a trust account, a copy of the bond or a copy of the formal notification by the depository that the trust account is established must be submitted to the Secretary of State at the same time as the registration.