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Don’t be a Victim of a Franchise Scam

Whether you are a young person just getting started or a seasoned member of the business community, the thought of being your own boss may generate feelings of freedom, wealth, and pride. 

One of the best ways to become an entrepreneur is to start a local branch of an already established business. This is referred to as franchising. 

Brad Sugars, founder and president of the award winning business coaching firm,
ActionCOACH as well as a best selling author, reminds us that while many legitimate opportunities exist in the world of franchising, there are many that either produce very little profit or even worse, are scams. Brad wants to share with us three important questions to ask to avoid being scammed.

“First of all, you need to look at the overall track record of the franchise. How long has it been around? How many units or franchisees does it have? What’s the overall satisfaction of the current franchisees?”

But the research should not stop there. A franchise is going to require a large amount of time and money and because of that, the potential entrepreneur must delve even deeper in to the company. Brad Sugars has this advice for us:

“You should look at all the company’s legal disclosures, as well as the people now running the company in addition to the management team that originally founded the company. The current key executives are important because their industry experience and knowledge is guiding the company into the future and the original management team is important to see how the company is staying true to its original vision and mission.”

Finally, if the company still looks like it may fit you and your goals, Brad advises the aspiring business owner to attend a “Discovery Day” and talk to as many current franchisees as possible. Nothing is more valuable than face to face conversation where honest peer reviews can be evaluated. In addition, business is about forming relationships and what better place to do that than in a room full of people who are or may be fellow owners of the same business as you.

Brad has a special word of advice for those people who are looking for work at home opportunities:

“It is very difficult to find legitimate “work at home” opportunities because those opportunities are generally unregulated and it is very hard to do good due diligence on an unregulated industry. “

Brad continues by saying that the best way to start a work at home business is by going through the same franchise evaluation model as he laid out with those franchises that are based out of the home.  This allows the potential work at home entrepreneur to go through the steps of due diligence and avoid being scammed.

Remember that you don’t have to have your business up and running tomorrow. 

Reading Brad’s best selling books will reveal a powerful truth to remember during this process:  He says that developing a strong plan will set you up for success. Rushing your research may prove costly in the end.



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