How to Spot a Scam Franchise Opportunity

We’d like to tell you that every franchise opportunity that’s out there is completely legitimate, but that simply wouldn’t be true. Whether we like it or not – or whether you like it or not – there are scam artists out there. Even worse, these scam artists are offering “franchise opportunities” to entrepreneurs (such as yourself) and can go unnoticed for years at a time. Just consider how long it took authorities to catch onto Bernie Madoff and how much higher of a profile he had.


So, what does it take to sniff out a scam franchise opportunity? That’s what we’re going to be reviewing.

Too Good to Be True

Make no mistake; any franchisor is marketing in your direction. Naturally, any franchisor is going to make things appear better than they really are.

However, there’s a reasonable limit to which a franchisor may represent his or her business, and then there’s an unreasonable limit. Here, you need to have a good B.S. alarm – to put it bluntly. If it sounds too good to be true, then it probably is.

Building Too Much Urgency

One of the ways that a prospective franchise opportunity might misrepresent itself is by creating the impression that opportunities are disappearing quickly. Certainly, this may be the case with some; however, you need to remember that the process of setting up franchises is slow. If you encounter a prospective franchise opportunity that’s pushing itself down your throat by insisting that if you don’t act now the opportunity will disappear, then that is a telltale sign that you’re being scammed.

Do Nothing… Literally!

This may be the most common tactic of all when it comes to scam franchise opportunities. You know you’ve seen them. These are the opportunities that advertise themselves as offering a business where you literally have to sign on and the money will start flowing thereafter.

It’s never that easy! Think about it. If making money were so easy, then why would anyone in his or her right mind pump gas, flip burgers, or scan items out at a grocery store? In these instances, the scam is almost always to collect your initial investment and then disappear. Avoid these kinds of scam franchise opportunities at all costs.

Where Is My Franchise Disclosure Document?

If you’re looking into buying a franchise, then the Franchise Disclosure Document (FDD) is the most important document that you’ll have access to. It’s mandated by law that this document be provided to you. If you encounter a franchisor who dances around the issue of providing you with this document, or outright admits to not having one, then the franchise opportunity is a scam. There’s no two ways about it.


Common Sense is the Rule

You might be sensing a common thread here, and that thread is common sense. When you’re researching potential franchise opportunities, make sure you’re using your common sense. As an entrepreneur, you’ve no doubt built up a keen intuition. Make sure that you’re using that intuition and not being blinded by the prospect of riches.