Study the disclosure document and proposed contract carefully. Under the FTC Franchise Rule a franchise or business opportunity seller must provide you with a detailed disclosure document at least 10 days before you pay any money or legally commit yourself to the purchase. This document must give 20 important items of information including: the names, addresses, and telephone numbers of other purchasers; a fully-audited financial statement of the seller; the background and experience of the business' key executives; and, the responsibilities you and seller will have to each other once you buy. If a seller claims to be exempt from the FTC Rule, check with the FTC first to make sure. Don't sign up through a website until after you've had a chance to look over all documentation.
	Talk to current owners. Use the list or other purchasers in the disclosure document to contact and find out about their experiences. Make sure to check whether the information in the disclosure document and promotional materials matches their experiences. You should be especially interested in the amount of work claimed vs. actually required and the promised profits vs. actual profits. Remember, a list of company-selected references cannot be substituted for the required list of franchisees or business opportunity owners.
	Investigate earnings claims. Promised earnings are only estimates. If companies make earnings claims, they are required to have in writing the facts upon which those estimates are based. A seller must tell you the number and percentage of owners that have actually met the claimed profit margins. Beware of broad and unsubstantiated claims.
	Shop around: compare franchises with other available business opportunities. Use the Franchise Opportunity Handbook, published by the Department of Commerce, to check out other sellers and compare their offerings. If your seller is making claims that are way out of line for the industry, beware. And if you shop around, you may find a better deal somewhere else.
	Listen carefully to the sales presentation. If you notice high pressure being used during a sales presentation, especially attempts to get you to sign up now, beware. The FTC rule requires at least 10 business days between getting the disclosure documents and paying or signing any agreements. If the salesperson tries to go faster than that, don't do it.
	Get the seller's promises in writing. If the salesperson makes statements that are different from the contract, disclosure documentation or promotional materials, make sure you get them in writing. If there is a dispute later, the written contract is what counts. If a seller refuses to put the promises in writing, for whatever reason, take your business elsewhere.
	Consider getting professional advice. Before you make any decisions, you should always get professional advice. Check with a lawyer for the legality of the business and to make sure you fully understand the contract. Have an accountant look over the finances and promised income. Remember, the initial money and time you spend getting professional advice could save you from big losses on a bad investment.

Protect yourself from Business Opportunity scams, check out the FTC brochures on that topic.

If you need advice about a telephone solicitation or you want to report a possible scam, call the NFIC hotline at 1-800-876-7060. You can also ask questions or report fraud using our online forms.

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