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Before investing money in a business opportunity or franchise offer, investigate the offer carefully. To protect yourself from unscrupulous salespersons, you should be aware of your rights. The Federal Trade Commission requires the promoter of a franchise to provide prospective buyers with detailed disclosure documents at the time of the offering.

You should be aware of several warning signs, including the following: high pressure sales tactics where the promoter does not want you to take the time to investigate the offer; representations of extraordinary profits with very little risk; excessively high start-up fees; or lack of communication or evasive answers about the plan. You should also be wary of any projections of income that are not backed up by specific experiences of existing franchises.

Something else to consider is the possibility that area saturation could exist. Learn how many sales people are in your area and whether you will have an exclusive territory.

When considering investing in a distributorship or business opportunity, be sure you have a clear understanding of all terms and conditions of the company's contract before signing. You may wish to have the contract reviewed by an attorney who is familiar with this type of agreement. Ask about the company's policies on contract cancellations and refunds.

Many contracts state that the distributor may not return the merchandise for a refund. We recommend that you personally examine the merchandise being offered before making a final decision. Research the market for the product or service, including competing products or services and how much the marketplace is saturated with those products or services.

Consider your own ability to sell, since ultimately that's what your success will depend on. Also, get a clear understanding of whether the company or an outside service would line up locations for vending machines, rack routes, or dealer outlets if those are involved in the business opportunity.

You should be aware of several warning signs, including the following:

1. High pressure sales tactics where the promoter does not want you to take the time to investigate the offer.
2. Representations of extraordinary profits with very little risk.
3. Excessively high start-up fees.
4. Lack of communication or evasive answers about the plan.

Something else to consider is the possibility that area saturation could exist. Learn how many sales people are in your area and whether you will have an exclusive territory.

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