Yet another downside to today's tough economic times - you can fall victim to investment fraud in your desire, maybe desperation, to find a new income stream to replace that of your lost employment.
Many business opportunities just don’t provide the level of protection that franchising offers. Consider that today, in many countries, franchising represents a greater protection against fraud due to the consumer protection and disclosure laws that now exist.
Many countries internationally have disclosure laws – the US, Canada, Spain, Mexico, France, Germany, Australia, Malaysia and Brazil to name a few notable examples. Governments have enacted various franchising laws to provide protection to unsuspecting investors falling victim to various forms of commercial fraud.
In the US, as a result of fraud that has been committed over the years in the field of licensing and franchising, federal law is governed by the Federal Trade Commission (FTC) and has established disclosure and franchising laws to protect investors. The recent Amended FTC Rule applies nationally to the offer and sale of franchises and some states have their own additional franchise laws that apply to their state. These laws give protection to franchisees that reside or establish a franchise business in the state. The Franchise Rule protects potential buyers of franchises by giving the material information needed in order to weigh prudently and independently the risks and benefits.
France, Spain, Italy and Belgium have pre-sale disclosure obligations. Australia has a mandatory Franchise Code of Conduct which regulates the contents of agreements. Brazilian franchise law applies in all Brazilian territory.
Be wary and protect your investment in the future against the many and variedforms of commercial fraud. Did you get the message?
I founded MatchPoint Franchise Consulting Network in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability. From its inception it was clear that free advice offered to franchise buyers by MatchPoint is vital to the would be franchisee to enable a better, prudent, buying decision.
MatchPoint consultants trained by Nigel Mayne know the tell-tale signs of fraud in the industry. The advice offered by our consultants does not make us lawyers, but is there to help bring all advice sought by the potential franchisee during the due diligence process to a high level of quality.
The franchising business model offers a greater level of protection against various forms of commercial fraud.
