Tips for Consumers: Franchising Fraud

Tips for Consumers
Franchising Fraud

These days, many workers are receiving large cash payments to retire early from their jobs. Many of them want to enjoy a second career starting their own businesses. And for many in the Hagerstown area, buying an attractive franchise has tremendous appeal.
While many franchise opportunities are legitimate, some promoters mislead consumers into investing in a franchise that is actually a dead end scam.
You may see them advertised as "fantastic opportunities." Or they come as part of a "Franchise Expo" at an area banquet hall. A promoter promises that you'll make easy, guaranteed profits. But he says to take advantage of this "ground floor" opportunity you must act immediately. He will often have slick brochures filled with testimonials; but after you sign the papers and rush them thousands of dollars, all you get are delays and broken promises. And some franchise promoters may simply disappear - with your money!
The two big mistakes we see franchise buyers make are haste and ignorance. The Federal Trade Commission requires franchise sellers to provide a detailed disclosure document at least ten business days before you pay any money or legally commit to the deal. This information includes identifying details about the seller, background on the business and its officers, and substantial explanations of how the franchise agreement works. It must tell you any restrictions, such as geographical territories or conditions on your right to sell or transfer ownership of the franchise.
During the sales presentation, high pressure statements like "prices will go up tomorrow" or "another buyer wants this territory" should make you slow down, not accelerate, your decision! A seller with a quality offer doesn't use this sort of pressure.
Be certain that all verbal promises are written into your contract before you sign.
Do they use fancy testimonials? These can be faked. Actually visit other franchise holders to observe their success for yourself.
Get good advice from experts, too. Have an experienced attorney and accountant review the offer to protect you legally and be sure the financial projections make sense.

To file a complaint visit: or write: BBB, 1414 Key Highway, #100, Baltimore MD 21230. Their office serves Baltimore and all of Greater Maryland.