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Spotting a Franchise Scam

There are many franchises out there that are clean and legitimate and we have no problem with that. However, whether you like it or not, there are also several scam artists out there. These scam artists, even worse, are providing “franchise opportunities” to businesspersons and they may go unnoticed for many years. Think of Bernie Madoff. You have to be alert at all times. The following are some guidelines to spotting a franchise scam.

Is it too good to be true?

Make no mistake, any franchisor will make things appear better compared to what they actually are.  They are simply pointing out the positives without drawing any attention to the negatives.  It’s a common sales tactic

But there is some reasonable limit to which the franchisor might represent her or his business. You should therefore exercise strict caution. Simply speaking, if the deal is too good to be true, you are staring at a franchise scam.

Too Much Urgency

Among the ways a potential franchise opportunity may misrepresent itself is through creating the impression the opportunities are quickly disappearing. Well, this might be the case with some. However, you need not to forget that it is a slow process setting up franchises. When you happen to meet a potential franchise opportunity which is pushing itself down your throat through insisting that when you fail to act now, the opportunity is going to disappear, treat this as a red flag you are being scammed.

Do Nothing, Literally

This might be the most common ruse of all concerning scam franchise opportunities. They market themselves as providing a business whereby you have to literally sign on, and the money is thereafter going to literally start raining. You probably have seen them. Be alert.

It is never that easy making money. And when money is just that simple and easy to make, then why should someone in his right frame of mind scan items, flip burgers, or pump gas? In this cases, the scammer is always going to take your initial investment, and that is the last time you’re going to hear from them. Avoid them at all costs.

Where’s Franchise Disclosure Document?

When looking forward to purchase a franchise, the Franchise Disclosure Document (FDD) acts as the most crucial document that you are going to have access to. When you happen to meet a franchisor who skirts around the issue of letting you have the document, or outrightly admits to not possessing one, then treat this as a scam. No two ways about this!  Here is a video outlining what to look for.

Let Your Common Sense Rule

When looking for a prospective franchise opportunities, ensure you are using your common sense. You have no doubt, as a businessperson, built up some keen intuition. Ensure you are utilizing this, and do not let yourself be blinded foolishly by a promise of prospective riches. You may be falling into a deep franchise scam.