Con men understand very well when their targets are the most vulnerable.
It’s a game for them: Their comparative strength (trump) is knowing how to manipulate your human weaknesses for their profit.
With hundreds of billions of dollars being thrown into the world’s financial institutions with zero accountability, the risk of funding a franchise fraud (in my mind) is be greater now than before the www recession.
One of my concerns in this economic environment was with how the newly laid off would react, what they would do, and how they would make decisions.
With nearly 60,000 reported layoffs in the United States alone, it is of pressing concern that these individuals understand the how to avoid failing for the franchise fraud.
Michael provided some extremely useful advice in a recent Blue MauMau interview named, Fraud Expert Says Those Wanting to Be Own Boss Easily Scammed.
First, with high unemployment the blood is in the water for unscrupulous sellers:
With the economy seeing the highest unemployment figures in nearly four decades, Webster thinks once those unemployed have access to credit, there is the potential for record numbers to be ripped off. In order to avoid being swindled, his first piece of advice is to think of buying a business as one option among many investment opportunities.
Michael warns against getting out of the pan and jumping into the fire and relying solely on your own research, which can become distorted (confirmation bias):
WEBSTER: There are times in our lives when for whatever reason we want our aspirations to be achieved immediately. For many, the most compelling overriding value is the need to be in complete control of their economic lives. Simply put, they never want to be fired again.
Those people are sitting ducks.
The con criminals know this and wave phrases like “be your own boss” and “in business for yourself but not by yourself.” Prospects pick up on such words of puffery. Buyers blow it up into full-scale fantasies of business ownership. And then to compound the problem, they perform bad due diligence by sloppily selecting evidence that only confirms they are making a good decision.
You need a professional 3rd party to help you and you need to take your time.
A buyer should take their time – some six to eight months. Read the franchise disclosure document. Get the best professional help to explore the opportunity and its accompanying documentation. Ask questions. Do not jump! Get a part-time job doing anything if you need to so that you don’t feel like you have to buy this franchise. If the opportunity is any good, you’ll figure it out.
Time will trump all frauds.
Excellent advice from someone with great insight. Michael had also suggested in previous posts to actually work for a franchisee within the proposed system for several to six months and that you should budget up to $5,000 for professional advice (on not only the contract but also the business deal).
Michael’s caution against being sucked into a phantom dream is very important. Follow his advice and this will greatly reduce your chance of experiencing a financial nightmare.