Business Law

How do I avoid franchise fraud-- how can we tell if a franchise is viable?

Firstly, you can choose to work only with a franchisor who is a member of the Canadian Franchise Association. Secondly, you can be wary of the following warning signs:

  • Slick salesperson trying to pitch a fast sale
  • Pressure for franchisees to sign gag orders
  • Insistence on cash transactions only
  • Exaggerated earnings
  • Promising a proven business model or proprietary technology that doesn't exist
  • Promising training that never materializes
  • Forcing franchisees to spend money on so-called improvements
  • Failure to provide disclosure

It's never a bad idea to contact a franchise lawyer and get their opinion on the legitimacy of a potential franchisor.

Samir Dandekar
Finance & Funding

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