How Does Franchise Fraud Generally Work?Most of the time franchise fraud will start with an ad being sent through the mail or a booth at a business opportunity convention. The advertisement or a salesperson will tell of a great opportunity for business ownership and investment, and generally make a lot of promises about how successful your business will be and how well you will be supported if you just pay some fees for a franchising license.
Once you show interest in owning a piece of the franchise, the person who is conning you might arrange a meeting somewhere like a hotel or restaurant. The con artist may tell you about the great business advice and great products you will be entitled to get once you pay for your franchise license, as well as how much money you will make doing business under the license.
After you pay for the licensing rights for the franchise, the con artist will generally disappear and you will never hear from him again. As for any support or products you were promised, most likely none of those items will ever be delivered, or if some of them are, most likely they will be sub-par. What Can I Do to Avoid Becoming a Victim of Franchise Fraud?There are a few signs you should look for when evaluating whether or not to enter into a franchise or distributorship agreement: - Avoid any franchises that promise you will make a certain amount of money. Remember that no business can control all market forces, and anybody who says you will be doing business in a protected market area is most likely selling you a line instead of a legitimate franchise license.
- Avoid any offers that guarantee you a refund if you are not completely satisfied as long as you operate your business according to instructions. The last part about instructions is obviously a stipulation that allows them to deny your refund for any flimsy reason the con artist can come up with.
- Make sure the person is not just trying to sell the franchise or distribution license, but is also trying to sell the product or service of the business.
- Make sure you are able to contact other investors who have participated in the franchise or distributorship.
What Should I Do if I Think I Have Been a Victim in a Franchise or Distributorship Fraud?There are a number of things you can do if you are a victim of franchise or distributorship fraud: - You can file a complaint with a number of organizations, such as your local Better Business Bureau or your State Attorney General's Office.
- You may contact the Federal Trade Commission and file a complaint with them.
- If you were first contacted about the franchise by way of an advertisement through the mail, you can file a complaint with your local post office.
- You can contact an attorney with experience with franchise agreements to see if you are entitled to money damages and compensation in a lawsuit for any money you invested in this supposed franchise. An attorney will be able to advise you of your rights and help you decide on the best course of action to pursue.
There are a few signs you should look for when evaluating whether or not to enter into a franchise or distributorship agreement: - Avoid any franchises that promise you will make a certain amount of money. Remember that no business can control all market forces, and anybody who says you will be doing business in a protected market area is most likely selling you a line instead of a legitimate franchise license.
- Avoid any offers that guarantee you a refund if you are not completely satisfied as long as you operate your business according to instructions. The last part about instructions is obviously a stipulation that allows them to deny your refund for any flimsy reason the con artist can come up with.
- Make sure the person is not just trying to sell the franchise or distribution license, but is also trying to sell the product or service of the business.
- Make sure you are able to contact other investors who have participated in the franchise or distributorship.
What Should I Do if I Think I Have Been a Victim in a Franchise or Distributorship Fraud?There are a number of things you can do if you are a victim of franchise or distributorship fraud: - You can file a complaint with a number of organizations, such as your local Better Business Bureau or your State Attorney General's Office.
- You may contact the Federal Trade Commission and file a complaint with them.
- If you were first contacted about the franchise by way of an advertisement through the mail, you can file a complaint with your local post office.
- You can contact an attorney with experience with franchise agreements to see if you are entitled to money damages and compensation in a lawsuit for any money you invested in this supposed franchise. An attorney will be able to advise you of your rights and help you decide on the best course of action to pursue.
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