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There is probably some kind of contract they sign that forbids it
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I dont see how. The chip it self is legal, backups are legal, I think the only way they would bust you is if you were selling backups to people who dont own the real game.
A buddy of mine is thinking out opening a computer shop here in town, and if he did I would sell premods and the chips to any one who comes in and wants them. Just need to find some one I can buy chips from cheap

But I dont think theres any law saying you cant sell a modchip out of your own store. You just wont find them at your local Wal-Mart.