Back in the Saddle Again and The Franchise that says it's not"

Helllllooooooo:

My blogging has taken a back seat for a while, due to the same reason anyone else who blogs does not for a while. I ran out of time or I did not have a lot to say. Anyone who knows me would tell you that it is very unlikely that I do not have anything to say, just ask me. But. I want to put things about that have some meaning, relevance and importance to those that are going to fork out some moola to buy a business system, aka business opportunity, franchise or dealership. Oh but I digress.

Recently I received a request from a woman whose name will remain unknown. She wanted some help in looking at a business system, that she was told was "NOT A FRANCHISE". Even in the agreement that she was sent it says that it is "NOT A FRANCHISE". Well folks as nice as this sounds if it walks, acts and quacks like a duck, it is indeed a duck. There are three tests which the FTC and the States which require franchise registration require in order to determine whether or not a business system, is a franchise. As I have discussed before these are as follows:

1. It costs more than $500.00

2. It requires the use of a Trademark or Service Mark.

3. It exerts significant control or influence over the way things are done in that business.


It is this simple. It is not hard. In looking at the document that stated the business was "not a franchise" it as so much a franchise that I could not believe the company was actually trying to get away with not being a franchise.

Additionally they were asking for $60,000 in upfront fees for what amounts to be a three year term plus $750.00 per month stating from the first month. The normal franchise term is ten years. Not only were they trying to sell an illegal franchise, they were offering what amounts to be a very bad deal for what amounts to be a little bit of training and some DVD's. When asked for people that have already bought into the concept, they provided only one person. This is a really bad sign. Franchise laws exist to protect the consumer, the average Joe. In my next post I will talk more about disclosure and why it exists.

The most interesting thing about this whole issue is that this was advertised on their website as a "Business Opportunity". So, they are a business opportunity that licenses their trademark, charges more than $500 and restricts what can and cannot be done under the mark, in other words, a franchise. If they did not license the trademark they would probably be a business opportunity in which case they would still have to register with 26 States. So you see.

The question that most people has is, Who cares if they are a franchise or not? Well first of all registered franchises and business opportunities afford protection under the law. Secondly what happens to the value of your business if one of the states comes after your parent company for selling illegal franchises and puts them out of business with fines and penalties? That kind of dilutes that value of the brand you paid for, doesn't it?

In closing always remember that it's your money. Ask questions, know what you are buying and do your homework. And, when people use the term "ground floor opportunity" run like hell.

You Got Scammed, Who's fault is it anyway?

Caveat Emptor, translated from latin to english, Let the Buyer Beware. Hey, I have been scammed and more than once. If you are someone who is a risk taker out looking for ways to make a buck, pursuing business opportunities on the internet and submitting inquiries to offerers of business opportunities and franchises then you are fishing in a sea of potential scam artists. Old sayings are old sayings because they have been around for a long time. Here are a few that apply:

1. There is no such thing as something for nothing
2. If it sounds too good to be true is almost unquestionably is
3. If it were easy everyone would do it and there would be no money in it
4. A fool and his money are quickly parted

There is that enough? The word entrepreneur means "one who accepts the risks of business". That risk means that you can lose all of your investment and maybe more. Everyday hundreds, even thousands of people are looking for a way to get out of the job market and into business for themselves or at least find a way to supplement their income. This is something that should be applauded and in reality if you are not a creative person that can come up with ways to make money then it is a good idea to consider buying a "system". In reality anytime you look at an ad for "How to make money" you are looking at a system. Internet Marketing ads about making money on Ebay, or with your own website or through affiliate marketing, or any of the other, I just sit back at my pool on my computer and make money, they are all "systems". Granted they are systems that are by and large based on ridiculous claims, but they are systems. Additionally franchises, business opportunities, and licensed dealerships are "systems" too. One would like to think that the more that is charged the more legitimate it is. Not true. Also one would like to think that the more regulated a system is, then the more legitimate it is, with franchises being the most regulated of them all. While there is some truth to this, purchasing a franchise is not without risk. If you are not a person that can follow a system you most likely are going to have your share of problems.

So, if you get scammed, who's fault is it? Buyer Beware! Most people would like to think that most other people are like they are, honest, trustworthy and legitimately looking for a fair deal.
Thinking like that is one of the main ways people get into trouble. So the question of whose fault it is comes down to the people involved. I could get into a big discussion of law and morality or ethics here but I am not going to do that. If the offerer of a business opportunity has a conscience, which by the way many do not, then they should have criteria and systems in place to screen out people that are not really a good fit for the offering. But, then again there should be no hunger or poverty in the world either, right? We should all be our brother's keep too right?

The reason that state and the federal government have registration and disclosure laws is simple, in that they are trying to protect the consumer or purchaser in this case. However ultimately it is the purchaser's obligation to do the proper research on the opportunity and the people offering it before they spend their hard earned money. Caveat Emptor.

Hard Questions for Business Opportunity Sellers

So here you are, tired of the corporate rat race or tired of not having enough cash, or just looking to get out on your own and you want to start your own business. Many people in the same boat get on the web and look for a business opportunity to purchase and of those unfortunately many get taken for a little and in some cases a lot of money. As I have discussed in some of my previous posts, franchise for the most part, by law, must disclose a lot more information than business opportunities. Also as has been mentioned previously, there are states which do regulate both fairly closely in the same way but definitely not all. In the 26 states which require registration, (search the posts) and you will find the link the first question you should ask is, "Are you registered with the state"? If they are not you may want to reconsider, if they are they should already have supplied the business opportunity disclosure document. In States where registration is not required here is a list of questions and also some of the intricacies of asking these questions.

1. Who are the owners of your company?

Many times you will be told that the company is a corporation and has shareholders. While this can be true, there are almost always major and minor shareholders. Who is in charge and who makes decisions? Many states and cities have search able court records online. Search under any of th key players names and see if there are any present or past lawsuits or complaints against them. Call the State and see what information you can find about the company.

2. What have your owners done in the past as far as businesses go?

The reluctance to give this kind of information is a red flag. Anyone that does not want to be open and honest about such things should be looked upon with great suspicion. Also anything that is said needs to be verified. Ask what you can do to verify the information.

3. What information can you send me, including but not limited to an agreement that I can look at or have my attorney review? Just the mention of attorney sometimes will cause a scam artist not to want to deal with you.

4. How long have you been in business? CHECK IT OUT

5. Who else has purchased this opportunity that I can talk to? You need to make sure these are not the same people that they always give out as references. You would be surprised at how often this happens. Have a relative or friend of yours call up from another State and act like an interested party and see if they give the same list of people.


6. Do you have any lawsuits against your or this company because of it's actions? Most states and jurisdictions have online searches.

7. How many people have not made it and did not really do well out of all the business opportunities that have been sold? If they tell you that they have sold quite a few and have not failures, then it's a MAJOR RED FLAG.



Take the name of the Business Opportunity and put it into Google with the term "scam" after it. Depending on how many people have looked at it, or bought it, you will be amazed at what this will uncover. Be advised though, some competitors use this as a tactic take business away from the business opportunity that you are investigating.

Ultimately if you spend your money on anything it is your responsibility to check it and the people offering it out. The more you are going to spend the more homework you should do. When is it all said and done it is Caveat Emptor.

What is a Uniform Franchise Offering Circular and Why are Franchises Safer than most Biz Opps

Franchises are business opportunities which are regulated by the Federal Trade Commission, FTC and also by various State agencies. What this means to the common person is that franchises are required by law to disclose certain information about the owners, the company and also the current state of the franchise. The purpose of this information is to give the prospective purchaser a consistent idea of what exactly they are buying. The Uniform Franchise Offering Circular commonly known as the UFOC contains current and recent lawsuits against the owner and or officers of the franchisor, audited financial statements, the license agreement granting the franchise to the buyer, all franchisees and their contact information that are currently part of the system, also any franchisees that have left, been terminated or whose license agreements have expired. Additionally there is a list of the training materials supplied, as well as a detailed description of all cost and expenses that a franchisee expects to incur such as any equipment, leases, and or advertising and marketing expenses.

Franchise law compels the franchisor to publish information that would give the prospective purchaser a lot of information that they would have to dig and ask for on their own in order make a determination if the franchise is in good shape, what to expect and something about the owners. At the present time much of this information is not available for those that want to purchase a business opportunity. If per chance you live in one of the states where business opportunities are highly regulated such as Illinois for example then a registered Biz Opp must supply much of the same information as is supplied by a franchisor. However, there are so many of them out there that many operate illegally, aka without registering in even the registration states. Much of this may end soon as a new franchise law was recently passed in January of 2007 that separated Franchises from Business Opportunities. In addition a FTC national Business Opportunity Law is on it's way and will probably be in place in 2008. It is not currently known what the 26 states that currently require registration of business opportunities will do but suffice to say that normally states that pass laws that are more demanding that federal laws do no not normally ease them later in any event. These states can be seen at http://www.ftc.gov/bcp/franchise/netbusop.shtm.

So many people have lost significant sums of money purchasing what amounts to be bogus business opportunities that state and federal agencies have had little choice but to do something in order to protect those that are are being taken advantage of. Unfortunately there are a lot of people of there that will do anything to separate people without business accumen from their money and thus government will step in. On one hand one can take the side that anyone should know what they are buying prior to purchasing it, on the other hand some of the biz opp offers are very slick and good at inducing those that are unaware to buy. It is a constant battle of ethics, moral, responsibility and regulation. Basically franchise offers must tell you a lot more than business opportunity offers. That said not all of either are good or bad, later posts will tell you how to smoke out a rat.

Checking it all out.

Before you spend a dime on any "Business Opportunity" you must ask yourself if it is one you can really sink your teeth into and do what it takes to make moola. Every business has a part of it that is not appealing. Like they say, "if it were easy, everyone would do it and there would be no money in it." Some businesses are very repetitive and boring, others have you sitting in a retail store all day, some have issues with collections and accounts receivable, while others are ones that have very demanding customers. Regardless of the business, there are always things that are challenging to deal with.

Secondly you really should check out opportunity as much as possible. When I say check it out, I mean check it out. Unfortunately you cannot just believe what the person tells you that is representing the opportunity for sale. Franchises offer significant safety over business opportunities or any other kind because they are regulated by the Federal Trade Commission in 36 States and the various State agencies in the other 14. See the upcoming post, what is a Uniform Franchise Offering Circular and Why are Franchises Safer?

Simply stated Franchise Law requires franchises to "disclose" a lot of important information to the prospective buyer. This information includes but is not limited to outstanding lawsuits if any, of the current officers of the company, audited financial statements of the company, a list of all franchisees including those that have quit, been terminated or who's license agreements have expired the previous year and of course all the legal required descriptions of what the buyer is actually paying for. In addition franchise law requires a waiting period between when the buyer gets the UFOC and when they can actually purchase it of approximately 2 weeks. Business Opportunities on the other hand do not require these disclosures in 24 or the 50 states. In 26 states, disclosure requirements are all over the map, some very light and some as complex as franchises. Illinois and California are two of the most stringent Business Opportunity Law states.

One of the best ways check out any Business Opportunity is to use Google and put the word "scam" after the name of the company. You will surely find a lot of information and probably a lot of unhappy folks if the Biz Opp you are looking into has a lot of unsatisfied customers. One great thing about the web is that things really get around whether they be good or bad. Look up the website in the state you live in and find out if they are registered in your state, if you happen to live in one of the 26 Biz Opp States.

Internet Marketing Opportunities, Are Most BS?

Put up a website, make a lot of money, right? You don't even have to have a product, you can make your own information product. Just do what "they" tell you to do and you will have the money rolling in. All you have to do is what all the "gurus" tell you to do. "Internet Marketing" has become a catch all phrase for what amounts to be a lot of BS for the most part. Marketing products on the internet is big business. A good many people do very well by selling products and services on the web. That said there are great many "internet marketing experts" that make their money purely by telling people how to make money.

If you're entire business is making money by selling information to people about how to make money selling information to people then that's not a real business, especially if you are hyping the amount of money you are making in order to do it. I am not saying that everyone who does this is a bad person, but most have no conscience.

Unfortunately there are some people that should not be in business but would like to be. Many of these people do not have realistic expectations of what it takes to make it from standpoint of neither time nor money. These people are usually easy prey for these "Internet Marketing Guru's" selling ebooks and utilities to them. What ends up starting out as a $49.00 ebook purchase turns into $5000 to $10,000 of ebooks, courses, and outsource website programmers.

Without a plan of knowing what you are doing, don't start. Bootstrapping is one thing, Flying blind without a plan is another. I suggest you don't.

So the bottom line is that most are BS because no one really tells you what it's going to make to start making money, nor the amount of time it's going to take. Do your homework and hope for the best but plan for the worst.

Business Opportunities and Franchises a Crowded Space

Make a visit to any of the more well known business opportunity and franchise portals and you will find an unbelievable array of choices; and the list keeps growing. The space is getting very crowded and making a choice is getting more difficult all the time. Initial and total investment help to narrow down the list for many that are shopping for a new way to get into business and while that does tend to help in a lot of ways it does not solve the entire problem. Both offerer and prospective buyer can spend a lot of time and money trying to get to the point where a buying decision is made. There are challenges on both sides. For the offerer the time and money to advertise then separate all the tire kickers from those actually interested can by enormous. For the buyer, the decision process is cumbersome. By and large most people do now know what it is that they want to do, nor do they have a good way to find out. Browsing around on the portals can be frustrating, the majors being www.franchisegator.com, www.franchisesolutions.com, www.franshiseforsale.com, www.franchiseopportunities.com, www.betheboss.com, www.bizbuysell.com, and www.entrepreneur.com.

In addition to these there are many smaller and less well known sites that also have a great many choices. In a previous post I called, "Know Thyself" I talk about important it is to do some self examination and know who you are and what it is that you not only want to do, but what it is that you are qualified to do before you go and make the decision to invest your time and money into any business endeavor whether it be a business opportunity, franchise or internet business.
Do some homework, take some aptitude and personality tests, DON'T talk to your friends and family unless some of them actually have a track record doing anything and they can give you object and honest advice. Write things down and take your time and make careful decisions. Take some time and imagine yourself doing what it is that will be doing. Take an inventory of your skill set and determine not only what you like to do, but also what you are good at. Are those things mutually exclusive?

Once you look at you, then you can look for an opportunity. It can be overwhelming but it also can have a tremendous amount of reward and satisfaction.

Franchise, Business Opportunity or Other

All franchises are business opportunities but not all business opportunities are franchises. Franchise are very specialized business opportunities which fall under Federal (FTC) and State disclosure and registration procedures. If the federal mandates are met for a franchise, only 14 states require separate registration in order to legally offer franchises in them. That leaves 36 which do not. Of the 14 states that require individual representation, most have similar requirements which makes the filing not overly complicated, however the filing fees add up to several thousands of dollars in addition to the legal fees of having an attorney file.

Taking into consideration the above, business opportunities that are not franchises are regulated in 26 states most of which has extremely varied filing requirements. This can make what appears to be a simpler and less expensive decision to go with a business opportunity for the offerer end up not being the case. In looking at the differences between franchises and business opportunities one can see the differences here:

http://franchises.about.com/od/businessplanning/p/Bus_Opp.htm


By and large franchises have a higher perceived value however there is by definition much more control exercised by the franchisor over the purchaser including but not limited to the use of a trademark or trade name.

One of the alternatives to business opportunities or franchises is a licensed dealership or distributor. These permit the licensee to operate under their own name market as a licensed dealer or representative. While the purchase or investment in these is usually less than a franchise however in most cases the resale of the business in the future is usually less as well. For more information on how to make a decision with regard to which one of these is better for you send in email to info@businesstradegroup.com.

The importance of Marketing and Sales

One of the most important and often least talked about things when it comes to business opportunities, especially home based ones is the dependence on marketing and sales. Many people want to be in business for themselves, but they do not want to be "in sales". This notion is absurd. Business is sales. Business revolves around the exchange of goods and or services for money. How do you expect people give you money if you don't know how to ask for it? Having enough money to adequately market your business can be extremely helpful in launching any business and or business opportunity. Advertising is just one component of marketing. However all money spent on advertising and other marketing to get interested prospects is a total waste if you cannot "close the sale". Marketing is a lot more than advertising however, it probably is the most costly part of any marketing campaign. PR is part of marketing. Networking is part of marketing. Direct mailers and promotional pieces are part of marketing. Talking in front of interested groups is part of marketing. Three foot rule introductions such as walking up to someone handing them your business card and telling them what you do is part of marketing. Knowing what to say to anyone after they express even the slightest amount of interest is sales. Designing a website that encourages a visitor to buy is sales. Answering questions in a way that encourages someone to purchase your offering is sales.

If you are the kind of person that does not see the importance of sales and marketing in any business, don't become self employed. If you are the kind of person that sees the importance of it but just cannot do it, then you better find, hire, contract with, or partner with someone that can. Get it? Marketing money is a necessity but only if you can make the sale. There is no such thing as something for nothing. OK, the next post.

Know Thy Opportunity

What is a "Business Opportunity?" In essence all franchises are business opportunities however not all business opportunities are franchises. When one is considering the purchase of a business opportunity it is highly advisable to "DO YOUR HOMEWORK" on the opportunity and also yourself. The vast majority of "business opportunities" require a considerable amount of marketing and or selling. Most "home based" business opportunities require the purchaser / new owner to get out there and "get the business". One must be very careful in making the determination as to whether they should part with their money when it comes to a business opportunity. As mentioned in a previous post, "Business Opportunity or Opportunity to be Taken Advantage of" twenty-six states require registration and disclosure of business opportunities similar to those being required by franchises. To see a list of these states you can go to,

http://www.ftc.gov/bcp/franchise/netbusop.shtm

Interestingly enough as of January 2007 business opportunities will no longer fall under the same federal statutes as franchises, most likely they will soon be getting their own. So, how does one make sure that what they are being offered what it is being made out to be? Ask questions and verify.

If you live in a State that requires business opportunity registration ask if they are registered to not only the offerer but also to the state. If you do not live in a state that requires registration take the name of the bus opp and put it into Google with the word "scam" next to it. Anyone who is ticked off and has posted on the web will have something somewhere about these guys.
Ask the owners who they are, their history, what they have done in the past, about their work history , names of their companies, enterprises, and anything you think is relevant. Asking for the names of people that have purchased and are happy has it's problems. How do you know that these people are not people that are just paid to tell you what you need to hear to buy? How do you know they are not just the same three people that the business opportunity seller uses to sell everyone? If your business opportunity offerer cannot provide you with the right kind of validation with regard to their offering, then move on. Call the Attorney General of the State where they do business. Google the heck of them and everything related to them. Remember it's your money and your time.

Know Thyself - Skill Set

Successful people know what they know, they know what they don't know and they are able to find, hire, contract with then manage those who know what they don't know or do what they don't do well so the organization operates efficiently and effectively. Another age old adage is to "higher people that are smarter than you are".

Basically if you are not smart enough to know that you are not smart enough to know everything and or do everything well then you can stop reading here because this is not for you. No one wants to work with or for an arrogant ass if they do not have to, but even if they do have to, they will take the first opportunity to hit the road if an equal or better opportunity comes along where the don't have to work with and or for another ass. Oh, but I digress.

The bottom line is that if one wants to be successful in business, it is highly advisable to have a realistic self concept. No matter how "smart" one is, there really is only so much time in a day. Also, give the rate at which things change in this crazy world there is only so much time to stay current on all things that pertain to your business. SOOOOOOO, one must look at themselves objectively or at the very least have someone else help them look at themselves in that way and decide what they are good at, what they are not, what they have time to do and what they don't, then come up with a plan to get people participating in the organization in a meaningful way to get the job done. Managing them is a topic for another time.

Business Opportunity or Opportunity to be Taken Advantage of?

Search the web and you will find business opportunity after business opportunity telling you that you can "start part time", "quit your job", "become financially independent", so on and so forth. While, there are a lot of great business opportunities out there, mixed in with them are a lot of not so good ones and also many that are outright shams and scams. Offerings that are deemed to be "Business Opportunities" are required to register and file in State which require them to do so; the number being 26 at last count. The list of the states which require business opportunity registration can be found at the following:

http://www.ftc.gov/bcp/franchise/netbusop.shtm


One must do a significant amount of soul searching and homework about the opportunity in question prior to "writing the check", and jumping in. This is the major area where prospective business opportunity buyers fail to spend enough time seeing if the opportunity is a good and legitimate one and also if the opportunity is actually a good fit for their personality and skill set.

Unfortunately some sellers of business opportunities sadly are not honest and ethical people and will set up elaborate systems to "encourage" the prospective buyer to buy. They will use the same people all the time to tell the buyer how good the opportunity is and that it is a legitimate one. In the business it's called "validation". Often a buyer asks, Who can I talk to that is doing the business now?". It is assumed that the people they direct you to, are actually "happy buyers" of their opportunity. Sadly, in many cases this is not true. Many times the person that a prospective buyer is calling is really not doing anything in the business or just someone that is saying that they are doing the business. While it is sometimes hard to be skeptical and ask the hard questions it is necessary.

Unfortunately there are a lot of people looking to separate others from their money by any means possible. In upcoming posts I will be talking about a lot of things that need to be taken into consideration with regard to self examination and also examination of any business opportunity or franchise prior to turning over your hard earned money and time.