Tips in Dealing with the Telltale Signs of Franchising Scams

Have you heard about the Nigerian email scams and lottery fraud that duped many people from all over the world? If you don’t, then you have to be aware about these con men and swindlers who have been targeting their victims through deceit and false pretenses in any means possible. In fact, franchising and business for sales are now included in major scams that made people to believe that they are doing legitimate business transactions with “real” entrepreneurs. Since it is difficult to determine fake franchising opportunities, it is necessary to know the telltale signs of such franchise scams. Your life savings and millions of dollars in investment money go down the drain if you will become one of the many victims of franchising frauds. Avoid doing business with shady franchise opportunities by checking out the list of legitimate businesses for sale at a vertical search site.

Most criminal syndicates have organised their elaborate schemes so that no one can tip them off and convince people that they are legitimate. Oversights usually fail in this one because law enforcement and regulatory agencies such as the Franchise Council of Australia find it difficult to uncover the full extent of these franchising scams. Besides, many of the main operators of these criminal activities have devised ways to put all possible trails to a dead end. It is important to prospective investors to do extensive research before venturing into business transactions that involves operating your own franchise and starting your business. Before joining the bandwagon of new businessmen and aspiring entrepreneurs, consider the following tips first:

- Ask for independent legal and financial advice in order to create a risk management plan

- Get advice from professionals regarding your rights in case the franchisor becomes insolvent

- Talk to current and past franchisees about the franchise opportunity itself

If there are issues and discrepancies about the way the franchise operates then you may be probably dealing with a scam. Here are some of the telltales of fraudulent business franchises that you need to know before you will become one of their victims:

1. Questionable Business Practices
You may not recognise it right away but shady business franchises have questionable business practices. When someone offers you franchises for sale, be sure to ask first about their experience in the particular sector they are engaged. Many of these con men have set up dummy corporations and their alibis and pretenses sometimes do check in quite perfectly. Never hesitate to ask questions about all the particulars and anything that catches your attention. Otherwise, you would get easily fall prey from their trap and rip you off for thousands and even millions of dollars.

If they are engaging in a legitimate and successful venture then their business should be widely recognised by local franchising associations and business councils as well. The fact is that “real” businesses do invest large sums of money in perfecting the way they run their franchise and business models. These con men employ the same modus operandi in defrauding prospective business “clients” – advance payment with the promise of major pay-off.

2. The Big Lie
In order to cover the big lie that franchises for sale are nonexistent, organised criminal syndicates and independent con men operate offshore offices, working telephone and fax numbers, and even contacts in the government and other agencies. If you do extensive research on the possible business offer and the people facilitating such scheme then you will be able to spot the inconsistencies, outrageous promises, and blatant lies.

You would be surprised as to how fake franchisers lure and ripoff millionaire investors, retirees, homemakers, and working professionals with the promise of good returns and outrageous profit margins. Legitimate businesses won’t promise specific return of investment because it all depends on how an investor manage his/her small business franchise.

3. On Your Own
Franchisers put their name and reputation on the line so they make sure that the investor manages his/her retail franchise successfully. Unfortunately, scammers put prices on every process along the way so that you have to work for them in order to “get” what you want. These con men tend to put psychological and even physical pressures to the point that victims have to pay them off in order to facilitate their business interest. They even have the nerves to remind you that franchise fees fluctuate because of the limited time offer.

Once you are on your own, you will be exposed to all the pressures of consummating the business deal. Such dirty tactics will deprive you of due diligence. Businesses that avoid any form investigations, inquiries, and background checks are obviously hiding skeletons in the closet.

4. Low Cost Franchises
White-collar crimes like this offer anyone low cost franchises when in truth, thousands and even millions of dollars have to be paid in order to expedite the process of getting the franchise in the first place. Since prospects who want to invest on a recognizable brand pay expensive franchise fee, criminals take advantage by promising low franchise fee and big return of investment. This is where many people fall for such ludicrous business proposals.

5. Litigations and Lawsuits
If you search public records and find litigations and lawsuits against a particular business that is offering cheap franchise opportunities then it would be wise not to do business with it. Franchisers with good records of accomplishment do have reliable and outstanding business practices that put clients and investors at ease.

Treat every franchise ideas peddled at you even if there is the promise of earning more money that you invested. Franchises don’t generate golden eggs that you hoped for so it requires all your common sense and business acumen to become successful.

No comments:

Post a Comment