Defining Franchise Fraud
General categories of frauds in a franchise comprises of falsified sales practices and misleading which is tricked to induce potential franchisees to incest or buy a franchise. The sales tactics used to misguide the franchisees comes in various methodologies. Stating misguided or false statements on the estimated financial performance is one of the most common methods of fraudulence in the arena of franchise.
Unless until the franchisor provides you with the information about the FDD (Franchise Disclosure Document) with all the necessary data. It is unethical and punishable under the law for the franchisor to give any actual or potential performance of the finance. Moreover, the franchise brokers or franchisors might also persuade a franchisee prospective to invest their life time savings in a franchise. They lure the potential people by making false statements about the whole atmosphere of the particular business.
So how do you spot them?
There are some signs through which you can pen down a Franchise fraud.
Nothing is always too good to be true! ‘Quick’, ’Easy’ & ’Fastest’ are some of the most luring words used in a franchise opportunity. Even though building a franchise is easier than starting a new venture from the scratch. But franchise also takes a lot of time and energy to well establish. Franchising is not easy as it may sound.
Most importantly ‘success’ doesn’t come right from the “discovery day”. If the particular franchise is so successful and famous, you might definitely come across that brand thorough somewhere. The prospective franchisee must be very careful while coming across such business. High pressure sales tactics always raises red flags in the franchise business. While the franchise is genuinely so good then you would get positive reviews from the former and the current franchisees.
Getting into the charms of the franchisor broker is another mistake people often do. He or She might look nice, talk great and always smile at you. But remember at the end of the day. Their ultimate motto is to clear a sale not to befriend you or hangout with you. You are just another sale for them. So, never fall for their charm.
Getting into franchise business also takes a considerable volume of energy, time and work from you. But there are several perks that tags along it. Always pay a keen attention to every minute detail when approaching or being approached in the franchise business. Always look out for the red flags to ensure it is legitimate.
After you find out the perfect opportunity and made sure that it is genuine, you have already reached one step closer to make your successful franchise business. For more ideas about franchise business and the legalities surrounding it, visit the Best Franchise Consultant.