Crushing Blow to My Business Model....

Well I needed a hobby and wanted to start a new business and fell into this MB thing. Things started out great and I have sold 6 units, 2 motors and 4 bikes. I am currently assisting on 3 builds ( getting paid) and have 4 orders to complete (full builds). All this happened in less then 2 months and I also have 6 tentative orders being worked out and several planned assists.

It seemed like immediate success, despite a few ordering glitches, and people just keep calling after a direct mail advertising test. Originally I was thinking people with suspended licenses would be a niche market and the demand would be high. I was right as everyone of my customers, except one motor sale and one bike sale, are in this situation.

SO I start looking into the legal stuff and consult my attorney and insurance agent to get everything in line. I live in Oregon so these things below I ran into are Oregon specific and/or State Farm specific.

Oregon Law:

Moped defined as no more then 50CC and can not go over 30 mph level ground.

Pedal assisted Bike (Street Legal) no more the 35 CC or 25 mph level ground.

Business Crushing (game over) laws:

No insurance available on Pedal assisted bikes unless registered as moped (which is possible) but then you must have class C license.

If on road and in wreck on pedal assisted bike between 35 cc and 50cc (or larger law defines that as moped) your at fault regardless of situation as no registration, insurance, or possible license. No way to skirt CC motor size law with such ramifications. Over 50cc you need motorcycle endorsement to drive "moped" legally.

If there was a less then 35 cc motor available and I built bikes with those, even though no license or registration are required, you still have insurance issue but the crushing blow is you must be eligible for a license (not suspended or revoked) to drive it legally.

I am glad I talked with attorney because after he reviewed all the laws it put me at great risk advertising no license required. He also suggested that even selling the motors may open me up to liability - especially advertising no license or registration.

Most police are over looking the CC law or misunderstand it as I called many different precincts and counties and asked. All told me under 50 cc does not need to be registered or that you don’t need a license to operate.

So in good conscience I can not go forward with the original business plan or go after the original niche. I will continue to assist builds and consult but for liability reasons I won’t order parts or build bikes for sale.

What a bummer as there is money to be made but I guess that’s the way it goes some times Now I will just build my bad arse bike I wanted as a hobby bike and it will stay a consulting service. If I can meet all the legal requirements for someone as stated above I will do that but the demand just isn’t there for "normal" situations to justify the investment.

So anyone in Oregon these are the laws regardless if the police understand it or not. If you get into a wreck, your fault or not, I am sure the attorney representing the other person can rip into your wallet or worse!

Ibedayank said:

31/35cc friction drive

problem solved

http://80ccmotorboys.com/
I would get ahold of somebody at the main dmv office and have them email/send you a copy of the laws with there state stamp on them.

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No not solved because you must be "ELIGIBLE" to drive even though the 35CC or less motor does not require a license or registration. So if you are revoked or suspended you are not eligible to drive.

Regarding the 35cc to 50cc it is still insurance, and a serious legal, issue for owner as it is legally defined as a moped.

90 percent of orders or purchases are from individuals already who somehow lost their license. All the assist are lost licenses. And, 93 percent of respondents (73 people) to my email advertising inquired directly as result of non licensing requirement.

I don’t want to advertise false claims, skirt the law, or create an environment where persons could get in trouble. Nor could I expect it to be a successful business model with potential liability issues.

david jeffries said:

i hate to sound like the idiot here, but you are not responsible if people drive these bikes illegally. who is to say they wouldnt buy the bike, register it, keep the tags for a year, then let the tags run out and say screw the registration. are you still responsible then? have the buyer sign a waver/disclaimer, and you are good to go.

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You dont sound like an idiot. It is regarding my original business model and targeted prospects. I can not advertise, in good conscience either, something that is not true. If I were to advertise falsely that is where the liability is according to my attorney.

And,that is not to say that "normal" licensed drivers wouldnt purchase bikes but the demand is not as high in my area - many small towns. So you are correct in normal conditions and legal drivers in what you say. Its just now I wont invest the money I planned or build a business like I orginally thought. It is now just a hobby thing, ill do some assist builds, and if regular licensed people want a bike it will be built to order with full disclosure.

Well there is the general issue of liability but I was just bringing up the point specific to Oregon. My point being that about advertising something opposite of what the law says - here in Oregon. It just wouldnt be right selling an item under false pretenses. A lawyer could shed me to pieces in court about that not even considering the other liability issues if a customer wrecked his bike and got hurt.

Regarding the issue of general liability it was my intention starting the business to get general liability insurance for the business when these other points were brought up. Between the lawyer and insurance agent these issues counld not be resolved legally.(Or within the scope of my intended business model)

Typically, most businesses have general liabiltiy insurance if they manufacture something. So say a light bulb company makes a light bulb and it burns down your house they have insurance to protect thier assests if they are sued. That too is what recalls are all about. When I was a manufactuer of computers I needed specific liability insurance against fire hazards becasue I sold electrical goods. Say the power supply burned down the house I had protection against that but that wouldnt stop a customer to go after the manufacturer either.

This whole idea of liability regarding failed parts and injury really is a whole other subject too. If I personally use a bike ( not as intended) then go hurt myself it will be a hard sell to a court I bet. However, who knows becasue the courts today can be a funny place. If someone knowingly sells a bike with a motor, and that being used not as intended, I am pretty sure they are exposed to risk this way whether a large company or individual...

david jeffries said:

I have thought about building and selling bikes. I have had a few inquiries, but no serious buyers as of yet. If I were to build and sell a bike, I would cover my butt as efficiently as possible. I would thoroughly document how the bike was built and do everything I could to make it as safe as possible. I would keep the bike until it was broken in, that way the entire break-in period would be one long test ride, and I would work out all the kinks, make neccessary adjustments and repairs. I would also provide mandatory riding lessons at no extra charge. in other words, you dont take the bike home until you get a few free riding lessons. I know Im no DOT approved instructor, but receiving instructions from someone who has been riding a little while is better than learning on your own. I know these things dont protect me from lawsuits, but at least if I go to court, I can prove I did everything possible to give the buyer a safe riding experience. at the very least, this could buy me some leniency.

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Using a bike that is not intended for use with a motor is a liability all in itself. You can be safe as can be and if a steering tube weld cracks at 30 mph you better have stunt man training classes too.

In my case, Oregon, I am building mopeds over 35 cc and my advertising idea doesnt jive with the law because under 35cc you still need to be an eligable driver to use on road.

Selling you personal bike no bill of sale all cash your proberly ok as beach cruiser says. Setting up a large scale business would be similar to creating the Whizzer company. There is insuranace and reduced liability but it isnt what I wanted to do. I wanted a small business/hobby to enjoy and make a few bucks doing something I enjoy.

Im keeping it to pre purchase advice ( $25.00) , build assistance ( up to $200.00 or 2 -1 hour sessions at 75.00 ea) I think this is important because if they are involved in build they understand the safety issues better as well, and break-in post maintainence inspection included in build assistance price. They buy motor, bike, and extras.

I may try to set up with some distributor as an affiliate to pick up a buck or two on those parts and orders if I start to move a lot of products. I have spoken with many distributors already and think I could develope a loyal relationship with knowledgable people.