Who is not allergic to the word, ‘scam’?
One word yet very harmful. People are allergic to scams. They don’t want to hear and talk about it either as much as possible. Many of us have been victimized by scams in any form.
What is a franchise scam?
When we say franchise scam, it is a situation in which the franchisor offers a certain product in exchange of a lump sum of figure, and promises you return of investments at a definite time. Franchise scam is sometimes called as franchise fraud.
To get rid of scam, the best defense you can do is to take your time. You’ll know if it’s a scam if the seller keeps on convincing you to invest as quickly as possible. Beware, it’s a warning sign. In general, the more promising the pitch is, the more vigilant the entrepreneurs should be – extra careful to those beginning entrepreneurs.
The most crucial thing to keep in mind is to avoid things that are too good to be true. Let’s say, if the franchise company promises you that you will generate a lot of money in a short period of time, then this is very suspicious. In fact, franchising is not an overnight business like ‘franchise today, earn tomorrow’, franchising is something that you need to work hard for. It entails extra effort.
Have a background check. Make use of internet to verify if this franchise company does exist. Check the credibility, sales, branding, and history or profile of the company. There are important things that you need to gather and learn, and researching about the company prior to your franchise is a brilliant idea. Find out if there have been any lawsuits filed against the company. Interview the former or current franchisees that you know to determine if that franchising company is good and certified.
Another thing to avoid is franchise opportunities which are advertised in infomercial on TV. Some people might raise doubts if they have purchased anything ‘As Seen on TV’. Never entertain franchisors who try to rush you into making a decision with things like limited time offers.
Make sure that the contract is prepared and arranged by both parties. If the franchisor promises that you can generate a certain figure, you need to get a black and white otherwise, you have no guarantee that they will follow through on that promise.