Laid-off professionals with severance packages and a lifetime of savings often view a franchise deal as a quick exit from unemployment and a steppingstone to financial and personal independence.
Sadly, it doesn’t always end that way. Many would-be entrepreneurs have ended up bankrupt and out hundreds of thousands of dollars after falling for dubious franchise concepts hawked by pushy salespeople.
If you’re thinking of opening a franchise, here’s what to know about your legal rights, the franchise marketplace and the research you must do before signing a contract and handing over that nest egg.
Seek independent advice
If you do a Web search for franchise consultant, you’ll find thousands of sites created by self-declared “experts.” Fees can reach $300 an hour, and a well-known industry secret is that many of these self-proclaimed consultants aren’t exactly independent. It’s understood that many of them push would-be entrepreneurs into specific franchise brands and concepts for financial gain.“You are better off going to people that do not have an agenda,” says retired franchise owner Betty Otte, who often counsels would-be franchise owners for free as district director of the Santa Ana, Calif.-based Orange County office of SCORE, the nonprofit group that offers free business counseling at 370 chapters in the United States. Read full article.
