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Franchising Your Business Should Not Be Smoke and Mirrors

Written by: David R Waldman

Article Overview: If you are looking to Franchise Your Business, do yourself a favor and investigate the franchise development company you are thinking of using. Beware of smoke and mirrors when talking with franchise development companies.

Franchising Your Business Should Not Be Smoke and Mirrors

I cannot stress enough how important it is to investigate the franchise development company you are thinking of using when franchising. It is very disturbing to uncover that some of The Franchise Maker's competitors are facing serious litigation, tax fraud and are under investigation for deceptive practices.

Yes this is all so true. Some of our unnamed competitors have been under investigation and currently in litigation for making misrepresentations when selling franchises for their clients. Evidently, several franchisees have come forward alleging that this franchise development company misrepresented their client because they had a vested interest in the client's company making negligent misrepresentations, concealment of information, conspiracy and breach of contract. The prosecuting attorney has said "This company completely stepped out of the role of being franchise consultants and became their client's partner, joint venturer and legal counsel".

This supports my position that a franchise development company who also sells franchises for their clients is a conflict of interest. If you come across a company that offers this service and if they also require that you give them a percentage of the company to defer fees, RUN. Not only are you jeopardizing the integrity of your business, but also future franchisees who buy into your system.

Other published reports confirm that our unnamed competitors have had their attorneys walk out on them refusing to be associated with the franchise development company. It has also been reported that just last week some of these franchise development companies have laid off key personnel after failing to meet payroll. It is unclear how extensive these layoffs will be.

Bottom line, if you are shopping our competitors, do your due diligence so you do not inherit unnecessary headaches and legal challenges.

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Article Tags: breach of contract, concealment, conflict of interest, conspiracy, deceptive practices, due diligence, franchise consultants, franchise development, franchisees, franchises, layoffs, legal challenges, legal counsel, negligent misrepresentations, prosecuting attorney, serious litigation, tax fraud, unnecessary headaches, venturer, vested interest



Related Forum Posts
New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
Re: Hello EvanCarmichaelers, and Thanks! - "Carmichaelers" ..nice.. Over at the Young Entrepreneurs I'm going to start calling my readers "DSilvelers" - I like the sound of that! Welcome on board theFranchiseMarket. Do you run a Franchise Business or are involved in Franchising in anyway?
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Re: Top 50 Lists - Hi Evan, How about "Top 50": -Inventor Blogs To Watch -Franchising Blogs To Watch -Business Book Review Blogs -Women Entrepreneur Blogs -Young Entrepreneur Blogs
Franchising & Licensing Can Be The Same Thing - FTC Rule 436 defines franchising as anyone offering an Agreement that contains these 3 things: 1. Licensing a "Mark" - which can be a trade name, service mark, commercial symbol, slogan, etc. 2. In the body of the Agreement, there contains, significant controls and assistance. 3. The licensee is paying the licensor in excess of $500 within the first six months of the actual offering of the business. Licensing and Franchising can mean the same thing today. If you do not decide to franchise and comply with FTC Rule 436, you may be in violation of Business Opportunity Laws that exist in 24 individual States.


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