A franchise scam is a situation where the franchisor promises to take you to heaven but never turns up for the trip. Hey! It’s not anything else, it’s heaven and of course you owe a lump sum figure for someone who takes you to heaven, don’t you? So you pay him with millions of wishes and then…..God bless the money.

Living in a society of growing corporate scandals amidst stringent regulative measures, it’s obvious that you should expect franchise scams. One of the main reasons for this is lenient regulations, which provides loop holes for the crooks to sneak in. It also happens as a result of skim reading and signing a binding contract which contains clauses of deceit yet buried. Whatever the reason, lamenting after getting caught to a scam is like closing the stable after the horse is gone. So if you are a busy mom who is willing to start up a franchise you should know how to avoid franchise scams.

The first thing to assess is the legitimacy of the franchise. Uniform Franchise Offering Circular (UFOC) is a place to start up. The document contains valuable information about the legality of the business. However certain smart fellows might not disclose this information in the document. So it’s always recommended to go one step further and check with reputed governing bodies such as International Franchise Association.

Apart from the documentary evidence few general points to look at here include:

• whether the franchise runs its business from home.
• whether the deposit request is more than 20% of the franchise fee.
• whether there is considerable number of franchise locations.
• whether the disclosed franchisees are relations of the franchisor

Next is to check the reputation of the franchise. The important point to remember is not to believe what the company boasts of. It is always prudent to conduct your own research regarding issues such as the popularity of the franchise, validity of forecast revenue…..etc. Franchisees, customers, neighbors in the area of concern, will provide you precise information.

Last but not the least read, read and read the franchise agreement and make sure before you sign, that you understand all the clauses top to toe. It is always advisable to consult a lawyer regarding any line of suspicion.

Let’s be enlightened and prevent franchise scams since it is our fortune we risk at the end of the day.