Scammers are masquerading as slick franchise owners to take advantage of vulnerable entrepreneurs.
Business franchises come in many different shapes and sizes.
From restaurants (Pizza Hut, Dominos) to petrol stations (Shell, BP) and supermarkets (7/11, Woolworths), owning an established business with a built-in clientele is an extremely attractive premise. What many people don’t know is that these seemingly profitable opportunities sometimes come with hidden scams or fraud.
Here are the top five things you need to know to protect yourself from Franchise Fraud.
1. Understand the contract.
Ensure you have a disclosure document from the business before exchanging any money. If you don’t receive such a document, then think again about signing on the dotted line.
2. Ensure Authenticity.
Is this business the real deal? Search online and even contact existing franchisees to make sure the business is authentic. Don’t rely on a website or word of mouth.
3. Don’t give in to high pressure tactics.
There is no time-limit to purchase a franchise. Don’t let anyone pressure or force you to agree to something you don’t understand or want.
4. “Get-rich-quick” is a myth.
Minimum effort to yield maximum reward is something only seen in the movies. There are no successful get-rich-quick schemes and only scammers make money from such promises.
5. Educate yourself.
Scams may appear to be professional and slick with sophisticated websites, marketing tactics and buzz-words. To best protect yourself, know what you’re getting into.
Remember: if you get involved with a fake franchise, you will lose money and most likely get burned.
For more information on how to avoid a franchise scam, visit the SCAMwatch website.
For additional advice about what to look for when choosing a franchise and what should be contained in a disclosure document, visit the ACCC website.