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- Don’t
believe claims that you can make money with little or no effort.
It takes hard work to run your own business, and no one can
guarantee how much profit you’ll make.
- Be
cautious about emails offering business opportunities.
Many unsolicited emails are fraudulent.
- Get
information in writing before you decide.
The Federal Trade Commission’s (FTC) Franchise Rule requires
franchise and business opportunity sellers to give you detailed
written information, called the “disclosure document,” at least 10
days before you pay any money or agree to purchase.
There are some exceptions.
If the company claims to be exempt from the Rule, call the FTC
toll-free at 877-382-4357 to check.
- Talk
to current owners. The
written information that sellers must provide includes the names,
addresses, and phone numbers of people who have already purchased the
franchise or business opportunity.
Ask them if their experiences matched what the company
promised.
- Investigate
earnings claims. If
the company makes any claims about how much you are likely to make, it
must give you written information about the number and percentages of
owners who have actually made those profits.
- Do
some research. Check
at your local library or bookstores for publications about how to run
a business. For free
brochures about franchises and business opportunities from the FTC,
call the toll-free number above or go to www.ftc.gov.
- Don’t
be pressured. Demands
that you act immediately are danger signs of fraud.
- Get
everything in writing.
The contract you are asked to sign should include all the terms
of the deal and the promises that were made.
- Get
professional advice. Going
into business yourself is a major undertaking, even if the company
offers to help. Review
the contract with an attorney, and ask an accountant to look over the
finances. Paying for
professional advice now could save you from big losses later.
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