Business Franchise Australia


Could That Business Opportunity Be a Franchise Fraud?

There are so many available franchises you could be a part of by investing in them. However, some might be franchise frauds. Before you decide to buy into them, you should do proper research and determine if you are dealing with a scam or not.


Recognizing a franchise fraud

Becoming a part of a successful business sounds very alluring, especially today when starting your own business from scratch could be very risky. Investing in a franchise could be a great option because you are buying into an established business.

So what exactly are franchises? McDonald’s restaurants are part of a franchise. The company is recognizable around the globe thanks to the individuals who open a restaurant under that name outside, regardless of the location. In return, the owners receive the right to use the name, promotional materials, special recipes, and much more.

McDonald’s is an example of a legitimate franchise and is not involved in scams. But hundreds of smaller franchises are more affordable and could also be a fraud. At the center of franchise fraud is a business that doesn’t really exist or is worthless.

People in charge of these fake franchises usually know how to present the business as profitable and up-and-coming. Some of them include expensive promotional materials and additional charges. Sometimes, you will get fake references that might make the company appear successful, and some might fall for this as well.

Being self-employed is a dream for many of us, and that’s why buying into a franchise seems like a great idea. But doing your homework before investing any of your money is a must. Here’s what to look out for:


A large cash deposit

Scammers often ask for a large cash deposit before any official agreement. It should be a warning for those interested in a franchise, especially if they say the deposit is non-refundable. If you give them your money, chances are you won’t see it again.

Before you make a deposit, contact a lawyer or a financial adviser. They will provide you with the proper guidance and might even detect a scam quicker than you because they have seen it all before. Additionally, you could look into what is a VPN because it might help you keep your personal data private when communicating with anyone you don’t know personally.

While you will be spending your money when opening a franchise, it won’t be before signing a contract. Anyone who asks you to send cash to be considered a partner is probably trying to scam you.


A sense of urgency

If a franchisor is pressing you to invest your money right away, something could be very wrong. They might try to persuade you by saying you will miss a chance or a lifetime unless you give them your money immediately. It is not how established franchises work, and you shouldn’t feel pressure at any point.

Furthermore, offers that sound too good to be true are probably fake. These scams include a low-cost entry fee with a promise of huge earnings potential. A franchisor might even tell you there aren’t many rules and regulations to follow, which might sound attractive. But don’t fall for it. Opening a franchise of any size requires a lot of work and dedication. Getting rich overnight rarely happens in these situations.


Odd online presence

Scammers invest in creating websites with fake testimonials to appear like they are running a real business. They know some people will look them up online and try to be prepared for that option. Check the references and the reviews and try to find out if they were written by real people or not.

The “About Us” page can also tell you a lot about the business itself. It should include all the important information written to help guide someone through the process of signing up for a franchise. Also, be careful when visiting these websites. Scammers could also use them to collect your personal information, and you should use apps like VPN for protection.

If you are wondering about a VPN definition, the answer is pretty simple. A VPN is a service that encrypts the information you send and receive. It will also hide your real IP because you can select a server anywhere in the world. It could also help you research a franchise because some websites might be geo-blocked.


Zero experience

Have you noticed that a business trying to sell you a franchise has zero experience in that field? Or have no active franchises in your area? It could also be a signal you are dealing with a scammer. Don’t be fooled by the excuses they are expanding the franchise in your part of the world.

Scammers will also avoid telling you what you will be selling exactly. Their instructions are usually very vague, and you won’t get a clear picture of the overall business model. You will get an agreement you need to sign, and many people usually give up on reading it because it is just too long.

The text itself is often very vague and will not tell you a lot about the business itself or about the people running it. Therefore, it is recommended to be careful and ask a lot of questions. Figuring out if your franchisor is a scammer or not isn’t too complicated once you know what to watch out for.