Many people believe that when they buy a franchise that the franchise business model has been reviewed by the government, yet this is not the case. In fact, franchising companies are only required to register their franchises with some, but not all states that they choose to franchise in. There are only 13 registration states in the United States of America, which require that the franchise or submit their disclosure documents to the state for review prior to franchising. They are not looking to see if the business is viable or if the business model is even successful. Their only objective is to make sure that the franchisor has indeed submitted the required disclosure documents and has them available for prospective franchise buyers. They do not check to see if they are correct or if they have lied in these documents. Another interesting thing that most people do not know is that; The Federal Regulators and State Regulators answer to literally "NO ONE" and that is the biggest fraud of all. No one is watching those OUR government is being paid with taxpayers monies to watch out for us. That is Scary. You would not believe me, if I told you what I have seen in life. Nevertheless, franchising is a relatively safe industry despite all this. Generally the regulators will look into complaints made by consumers who feel they have been fraudulently induced into buying a franchise where the Franchisor misrepresented the investment in the franchise. Often, the franchising regulators will is still the Franchisor is guilty even though 85% of all the complaints from consumers are themselves misrepresentations of what happened. Suffice it to say if you are going to buy a franchise or Franchisor company you need to study up on what franchising is all about before you take the plunge. Please consider all this in 2006. |
