The Better Business Bureau received an inquiry yesterday about a franchise opportunity based in Western Kentucky and being sold to potential business owners across America. As with any business or franchise opportunity, a person interested in the franchise should carefully research the company before investing.
When jobs are hard to find, people often consider creating their own job. In a "pure capitalism sense," this is one of the good things that happens during a time of high unemployment. Perhaps it's based on an old saying, that "necessity is the mother of invention." That can be a wonderful thing.
But going into business for yourself is filled with risk. Most new businesses fail. Purchasing a business franchise can increase a person's chances of success, but brings other risks. The key is very careful research to insure that you are choosing the right franchise opportunity.
Too often, people interested in starting their own business or earning extra income become victims of a "business opportunity scam." Such scams are often operated by fly-by-night franchisors who sell opportunities that sound good ("under $10,000 to start your own business;" "we provide you with leads;" etc.). But once these franchise sellers have your money, the promises they made go unfulfilled.
Anyone considering a franchise as a way to start a business could do no better than start at the Federal Trade Commission website. Two publications available on the FTC's website, www.ftc.gov, offer excellent information and advice:
- Franchise and Business Opportunities provides basic information.
- Buying a Franchise: A Consumer Guide provides an in-depth review of the Franchise Rule and the information that must be included in a disclosure document that a franchisor is required to provide to potential investors.
The Better Business Bureau especially encourages anyone considering a significant investment in a franchise or business opportunity to, as the FTC recommends, "visit current owners
in person" (emphasis added). Spend time seeing the business in operation. This will assure that you don't become a victim of a common tactic used by business opportunity scammers, which is to hire "shills" to serve as references for the business. These shills can falsely claim to be happy owners of the business opportunity that is being marketed and make it sound like a wonderful opportunity, when in reality they are only helping an unscrupulous seller who wants your money.