North Carolina Business Opportunity Bond: A Comprehensive Guide

July 11, 2022

North Carolina Business Opportunity Bond

This guide provides information for insurance agents to help their customers obtain a North Carolina Business Opportunity bond

At a Glance:

  • Average Cost: Between $500 to $3,750 per year based on the applicant’s credit history
  • Bond Amount: $50,000
  • Who Needs it: Business opportunity (Bus-Op) sellers operating in North Carolina that guarantee purchasers will make a profit from their purchase or they will receive a refund
  • Purpose: To ensure that purchasers will receive compensation for financial harm if the seller commits fraud or violates any contracts made
  • Who Regulates Bus-Op Sellers in North Carolina: The North Carolina Secretary of State

Background

North Carolina Statute 66-97 requires all Bus-Op sellers operating in the state to register with the Secretary of State. The North Carolina legislature enacted the registration requirement to ensure that sellers engage in ethical business practices. To provide financial security for the enforcement of the registration requirement, Bus-Op sellers that guarantee purchasers will make a profit from the opportunity must purchase and maintain a $50,000 surety bond to be eligible for registration.

What is the Purpose of the North Carolina Business Opportunity Bond?

North Carolina requires Bus-Op sellers to purchase a surety bond as part of the application process to obtain a registration. The bond ensures that purchasers will receive compensation for financial harm if the seller fails to abide by the regulations outlined in the North Carolina Business Opportunity Sales Act. Specifically, the bond protects purchasers if the seller engages in any acts of fraud or breaches any contracts. In short, the bond is a type of insurance that protects purchasers if the Bus-Op seller violates the terms of their registration.

North Carolina Business Opportunity Bond Form

North Carolina Business Opportunity Bond Form

How Can an Insurance Agent Obtain a North Carolina Business Opportunity Surety Bond?

BondExchange makes obtaining a North Carolina Business Opportunity Bond easy. Simply login to your account and use our keyword search to find the “Business” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.

At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.

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Is a Credit Check Required for the North Carolina Business Opportunity Bond?

Surety companies will run a credit check on the applicant to determine eligibility and pricing for the North Carolina Business Opportunity bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.

How Much Does the North Carolina Business Opportunity Bond Cost?

The North Carolina Business Opportunity Bond can cost anywhere between $500 to $3,750 per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the cost of the $50,000 bond requirement.

$50,000 Business Opportunity Bond Cost

Credit Score Bond Cost (1 year)
680+ $500
625 – 679 $750
575 – 624 $1,875
550 – 574 $2,500
500 – 549 $3,750

Who is Required to Purchase the Bond?

North Carolina requires Bus-Op sellers that make the following guarantees to purchasers to purchase a surety bond as a prerequisite to obtaining a business registration:

  • That the purchaser will make more money from the opportunity than they spent on it
  • That if the purchaser spends more than $200 upfront and isn’t satisfied with the purchase, the seller will:
    • Issue a refund, or
    • Buy back all products, equipment, or supplies

North Carolina Statute 66-94 defines a Bus-Op seller as an individual or business entity that sells or leases any products, equipment, supplies, or services that enable the purchaser to start a business.

How Do Bus-Op Sellers Apply for a Registration in North Carolina?

Bus-Op sellers in North Carolina must navigate several steps to obtain a registration. Below are the general guidelines, but applicants should refer to the Secretary of State’s Business Opportunity Sales page for details on the process.

Registration – All North Carolina Business Opportunity Registrations expire annually and must be renewed before the expiration date

Step 1 – Purchase a Surety Bond

Bus-Op sellers must purchase and maintain a $50,000 surety bond if they make the following guarantees to purchasers:

    • That the purchaser will make more money from the opportunity than they spent on it
    • That if the purchaser spends more than $200 upfront and isn’t satisfied with the purchase, the seller will:
      • Issue a refund, or
      • Buy back all products, equipment, or supplies

Step 2 – Complete the Application

All North Carolina Business Opportunity Registration Applications should be mailed to the following address:

NC Secretary of State
Business Opportunity Sales
Post Office Box 29622
Raleigh, North Carolina 27626-062

Completed applications must consist of the following items

    • Two copies of the required disclosure statement that meets all the requirements outlined in North Carolina Statute 66-95
    • Consent to Service of Process
    • Surety bond
    • $250 filing fee

How do North Carolina Bus-Op Sellers Renew Their Registrations

Prior to the expiration date, the Secretary of State will send the seller a notice containing instructions on how to renew their registration. Sellers must pay a $250 renewal fee.  All North Carolina Business Opportunity Registrations expire annually and must be renewed before the expiration date.

What are the Insurance Requirements for Bus-Op Sellers in North Carolina?

North Carolina does not require Bus-Op sellers to obtain any form of liability insurance as a prerequisite to obtaining a registration. Bus-Op sellers must purchase and maintain a $50,000 surety bond if they make the following guarantees to purchasers:

  • That the purchaser will make more money from the opportunity than they spent on it
  • That if the purchaser spends more than $200 upfront and isn’t satisfied with the purchase, the seller will:
    • Issue a refund, or
    • Buy back all products, equipment, or supplies

How Do North Carolina Bus-Op Sellers File Their Bonds?

Bus-Op sellers should mail their completed bond forms, including the power of attorney, to the following address:

NC Secretary of State
Business Opportunity Sales
Post Office Box 29622
Raleigh, North Carolina 27626-062

The surety bond requires signatures from the surety company that issues the bond and from the seller. The surety company should include the following information on the bond form:

  • Legal name of the entity/individual(s) buying the bond
  • Surety company’s name
  • Date the bond is signed

What Can North Carolina Bus-Op Sellers do to Avoid Claims Made Against Their Bonds?

To avoid claims against their bonds, Bus-Op sellers in North Carolina must follow all registration regulations in the state, including some of the most important issues below that tend to cause claims:

  • Do not engage in any acts of fraud
  • Do not breach any contracts made with purchasers
  • Issue all owed refunds

What Other Insurance Products Can Agents Offer Bus-Op Sellers in North Carolina?

Although not required, most reputable Bus-Op sellers will purchase liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.

How Can Insurance Agents Prospect for North Carolina Bus-Op Seller Customers?

North Carolina conveniently provides a public database of active Bus-Op sellers in the state (scroll down to other searches, select all entities, and then click search). Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.

2022-08-19T09:21:52-04:00