How to Report Franchise Fraud – Handling Cases of Scam

Steps to Report Franchise Fraud

Does franchise fraud really exist? I keep on pounding, brainstorming and asking myself this sort of question, until I got to realize the conceptual framework of the terms “franchise fraud“.

Going be the definition, it refers to any action relating to fraud of operation, sales and or termination of any franchise business.

Are you a victim of franchise fraud? Do you need some tips to identify fraud cases in your franchise?

Are you a victim but need information on how and who to report to? If you are not hearing this for the first time, but still, don’t understand the concept, kindly read and digest this note because it is going to be educational and informative.

The perpetrators of franchise fraud is usually the franchisors, since they own the franchise company and have upper hand than the franchisee, they tends to (though some) take advantages over the investor’s, misleading and misguiding them on the issue relating to how to make profits.

They also mislead them about the costs involved and the require fees or giving them fake orientations schemes that will lead to the franchisee failure on the franchise business so that they (franchise company) can equally sell the same franchise outlet to another innocent investor.

Isn’t this absurd? In fact, it is a great crime. Any franchise company found in this dirty game has violated the franchisee’s contractual rights, as such break the franchise golden law.

The following are brilliant steps to follow in other to report a franchise scam.

1. Identify the forms of franchise fraud you fell for

Identification of the forms of the franchise fraud you fell for is the number one step you are require to note so as not to look stupid before the personalities you are to report the case to.

Initially you must be able to identify what is really going on, the type of franchise fraud being committed and every single evidence that point to the fact. Garner more than enough plausible truth and other elements of believability to make your acclaimed franchise fraud acceptable.

However, it will be of great help if this article can highlight some kinds of franchise fraud we have before moving further and they are;

• Churning

This is a franchise fraud pertaining to setting up to fail. It relates to a pyramid scheme where a franchise that is being sold out will be freaked so that the franchisee will fail and the franchise business will be reclaimed by the franchisor, and again sells it to another investor to make additional money.

• Terminating a Franchise Agreement

Every country or states has its own law protecting unfair and unlawful terminations of franchise agreementand or relationship by the franchisors. It is categorically entrenched under franchise law that no franchisee should be terminated without ‘good cause’ or cogent reasons.

• Profit Misrepresentations

Any franchisee that is being promised massive amounts of profits before taking up a franchise business by the franchisor just to lure the individual is prohibited by federal law. There are series of cases like this that often leads to the franchisee financial loss at the end of day.

And other forms of franchise that I wouldn’t be able to discuss with you today. After you have identified the type of the franchise fraud, you can proceed to the next step.

2. Complain to Federal Trade Commission

This agency are responsible for processing any complaint from people who believe they’ve been defrauded and refer them to the department who will check on the matter for believability.

This agency will help you to prepare an affidavit you will use in filing a police report.

3. Contact your Attorney

Since you have an attorney of your own before or during the course of filling up the franchise documents, it is advisable you visit him and explain the whole scenario to him.

In a situation like this, an attorney shouldn’t be left out. If you don’t have one, endeavor to hire because they are learned individual who are knowledgeable about the law of the land. An Attorney will also be useful in case the issue is later transfer to the court of law.

Various federal and state laws are responsible for United States franchise industry and to protect against any franchise fraud, so it is only an attorney or any legal practitioner that will understand better the category of franchise fraud you are into in the franchise law of the country.

4. File or Write a Police Report

Take a copy of the federal trade commission fraud affidavit and other theft evidence they’ve gathered for you and a valid identity card to any nearby police station to file a report.

Request for a copy of the report with the report number so as to stay tune and keep track on every single movement and progress of the franchise fraud case.

Be informed that the investigation will make use of all your written statement in the course of ferreting out the issue to conceal the truth in franchise frauds.