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 franchisees.
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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