Starting a business, particularly a franchise, can be a time of great excitement and great fear. In the current economic climate, every industry is met with the challenge of fraud and scams; franchising is no different.
One of the things that soon-to-be franchise owners fear most is buying a franchise, going through all the training and securing your location; only to be faced with a contract that has tied you into unforeseen taxes and obligations. Contracts can be misleading, and even with a keen eye, there could be fine print that catches you off guard. Here are a few ways to protect yourself from frauds and scams in the franchising industry:
• The Flashy Salesman
Often, fraudsters selling dodgy business opportunities will arrive in a fancy car, wear an expensive watch and be dressed to the nines to give the appearance of success. They look like money, leading people to naturally hope that some of their success and wealth will rub off on them. So, be sure to ask for the company’s financials. Franchise companies need to be audited in the Uniform Franchise Offering Circular, so double-check whatever information is given to you.
• They Press For a Quick Decision
If they tell you that locations are going fast or that you need to make a decision within the next few days, it should serve as a red flag. These sales pitches are geared to make you feel like you are indecisive and not ready to take action. Don’t be bullied into making a hasty decision. Recognise the crude closing technique for what it is and go through all the information thoroughly.
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