How To Stay Safe From Franchise Fraud

Posted by franchise-law on September 3rd, 2019

Investing in a franchise is a huge financial decision. The best thing you can do is to make sure that everything is perfect and in place to earn your maximum profit. Every investor starts their business only to get a return over investment however not every rosy dream is meant to succeed. There are many reasons for the failure of the franchise, sometimes it may be the dispute or terrible staffs that can make the world challenging. However, the most shocking blow comes from fraud and scam in the franchise business. The European Franchisee Attorney always warns the investors about it so that no one will fall prey in their trap.

What is franchise fraud?

The most common form of the franchise fraud is misleading sales practice that will attract prospective investors to invest in that franchise. There are many ways to portray the misleading sales tactics like making a misleading statement regarding the projected financial performance. The practice is a complete unlawful as this information should be in the FDD made by the European Franchisee Attorney.

Along with that, there is another way of fraud where the conman extracts the lifelong saving of the investor by stating misleading nature of the business or the required time to break even, even about the services or products.

How to identify franchise fraud?

Here are some steps to safeguard your business against frauds in franchise business:

For any investor, it may sound scary but there are some ways to spot it.

· Is it too good to be true?

In case, the franchiser claims about the easy and quick way to earn money which may sound unbelievable; then don’t believe it. Remember, there is no term like easy money does exist. You must be cautious about the marketing material of the franchise. The high-pressure sales tactics can be dangerous for franchisees. You may take the help of the European Franchisee Attorney to check with the details.

· What are the terms of the FDD?

Every franchisee must sign the Franchise Disclosure Document or FDD before they sign the deal. There are many items that should be included in FDD like background info, bankruptcy information, ongoing costs, litigation history, ongoing costs, trademarks, franchise financial statements, and many other things. You must appoint the European Franchisee Attorney to check whether everything is appropriate and original in this FDD. In case they assure you that all information is verified; then only you can start the deal.

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