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 Go slowly and get the facts before you embark on a new business venture If you have ever said, "I wish I could be my own boss, set my own hours and work at home," you are not alone. Many of us might find the idea of making a good living by investing little effort and less time very appealing. You have probably seen ads for so-called "business opportunities" in newspapers and magazines, even tacked onto telephone poles. The opportunities they describe are usually franchise-type arrangements, not a business you would start from scratch. The Federal Trade Commission (FTC) cautions would-be entrepreneurs to approach such offers with care. Promoters of business opportunities may claim to have helped others achieve fast and easy riches. What they don’t tell you about are the people who ended up losing the money they put into the enterprise.. Do your homework and don’t rush the process: Be sure to take your time in deciding whether you want to get involved in one of these "business opportunities". Find out everything you can about the deal and the person who is trying to sell you on it. Something that sounds too good to be true usually is. The FTC recognizes the pitfalls, and its Franchise Rule has protections in place to guard you. Before you plunge into an "opportunity" that could end up burning you, take the time to follow these steps: Investigate earnings claims: Get them in writing, including the number and percentage of recent clients who have earned at least as much as the promoter claims. Interview prior purchasers: FTC rules require business opportunity promoters to give you the names and addresses of at least 10 prior "purchasers" in your area. Talk to all of them, preferably at their business locations. Be aware that they could be working with the promoter. Scrutinize the disclosure statement: The FTC’s Franchise Rule requires most business promoters to provide potential purchasers with a disclosure statement that has information about the company, including whether it has faced any lawsuits from prior purchasers or lawsuits alleging fraud. Look at the promoter’s background: Consult the attorney general’s office, the state or county consumer protection agency, and the Better Business Bureau in your area and the area where the promoter is based. Ask them if the promoter has a history of complaints. But remember that promoters often change names and addresses to hide such negative information. Check with the product producer: If the opportunity involves selling products from well-known companies, call the legal department of the company and find out whether the affiliation is legitimate. Consult the experts: Go over the contract with an attorney, accountant or other business advisor. If the promoter requires a deposit, arrange to establish an escrow account where it can be maintained by a third party until the deal is made. December 13, 2001
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