Franchises and Business Opportunities

Want to be your own boss? A franchise or business opportunity may sound appealing, especially if you have limited resources or business experience. However, you could lose a significant amount of money if you don't investigate a business carefully before you buy. By law, franchise sellers must disclose certain information about their business to you, the buyer. This guide provides helpful advice on buying and evaluating a franchise and information on how to avoid common scams.

Evaluating Opportunities

• Consumer Guide to Buying a Franchise
  The Federal Trade Commission provides advice on avoiding costly pitfalls before buying a franchise.
  
• Could Biz Opp Offers Be Out for Your Coffers?
  Under the FTC Franchise Rule, most potential business purchasers have the right to receive information about the earnings potential of a business opportunity. Most legitimate business opportunity promoters don't hesitate to give this information. This guide helps new business owners how to understand, spot, and avoid fraudulent business opportunities.
• Guide to Franchises and Business Opportunities
  Provides practical information about some common business opportunity scams; how to spot, stop and avoid them; and how to file a complaint if you think you've experienced a fraud.
• Thinking of Buying a Business Opportunity?
  Learn how to evaluate the claims made by business opportunity sellers, and avoid scams and costly mistakes.
  

Franchise and Business Opportunity Rule

The Federal Trade Commission's Franchise and Business Opportunity Rule requires franchise and business opportunity sellers to give you specific information to help you make an informed decision. The following resources explain your rights as a buyer, and the information the seller is required to supply.

Information for Buyers

• Franchise and Business Opportunity Rule : Buyers' Guide
  Guide to the Federal Trade Commission's Franchise and Business Opportunity Rule, which requires franchise and business opportunity sellers to give you specific information to help you make an informed decision before buying.
  
• Franchise and Business Opportunity Rule : FAQs for Buyers
  Most frequently asked questions about franchise and business opportunities, including information on how to get a pre-sale disclosure document and how to get legal help.

In addition, it's important you know which rules apply to the company selling you the franchise. The more you know about their requirements, the better informed you are when evaluating their opportunities.

Information for Sellers

• Guide to the Federal Trade Commission Franchise Rule
  This guide explains how franchisors and businesses must comply with the FTC's Franchise and Business Opportunity Rule.
  
• Recent Franchise Rule Opinions (1995 to Present)
  Provides a listing of informal staff advisory opinions in response to requests for interpretation of FTC's Franchise Rule.
  
• State Pre-Sale Disclosure Requirements : Business Opportunities
  Information on states that have laws prohibiting sales of business opportunities unless the seller gives potential purchasers a pre-sale disclosure document that has first been filed with a designated state agency.
  
• State Pre-Sale Disclosure Requirements : Franchises
  Information on states that have laws requiring franchisors to provide pre-sale disclosures.

Information on Specific Opportunities

The following guides have been prepared by the Federal Trade Commission, and provide help advice on how to avoid common scams.

• Buying a Janitorial Services Franchise
  Provides helpful advice to individuals interested in buying into a janitorial franchise. Includes information how to avoid scams and legal problems.
  
• Costly Coupon Scams
  Avoid fraudulent business opportunities and work-at-home schemes that offer big earnings by selling coupon certificate booklets or cutting coupons at home.
  
• Lotions and Potions: The Bottom Line About Multilevel Marketing Plans
  If you're thinking about joining what appears to be a legitimate multilevel marketing plan, take time to learn about the plan before signing on.
  
• Medical Billing Opportunities: Worth a Second Opinion
  Learn about medical billing scams before you sign on. The Federal Trade Commission has brought charges against promoters of medical billing opportunities for misrepresenting the earnings potential of their businesses and for failing to provide key pre-investment information required by law.
  
• Multilevel Marketing Plans
  Not all multilevel marketing plans are the legal. Consider these seven steps before signing up for one of these business opportunities.
  
• Net Based Business Opportunities: Are Some Flop-opportunities?
  Advice to consumers considering Internet-related business opportunities.
  
• Take This Scheme and Stuff It: Avoiding Envelope-Stuffing Rip-Offs
  Learn about how envelope stuffing business opportunities actually work.
  
• The Gifting Club-Gotcha
  Learn how to avoid this pyramid scheme.
  
• Work-at-Home Schemes
  Work-at-Home business opportunities seem to be everywhere. While you may find these ads appealing, especially if you can't work outside your home, proceed with caution. Not all work-at-home opportunities deliver on their promises.