Florida Consumer E-Newsletter |
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Download PDF version [867K PDF]
A Message From the Commissioner...
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Dear Friends: Countless Americans dream of owning their business. Although many achieve this dream, others run into financial ruin by falling prey to scams devised by unscrupulous sellers of business opportunities. Many times, these promoters imply that investors can see a substantial return with minimal effort. A business opportunity is an offer to assist a person in starting his or her own business by providing - |
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either through sales or lease - products, equipment, supplies or service needed to carry on the business. Business opportunities range from addressing envelopes or assembling toys at home at a cost of a few dollars, to establishing vending machine routes or installing pay telephones for thousands of dollars. Remember, we're here for you. Our Consumer Hotline, calling within Florida 1-800-HELP-FLA (435-7352), outside of Florida 850-488-2221 or en Español 1-800-FL-AYUDA (352-9832), will answer any consumer related questions you may have or direct you to the most appropriate resource for assistance. You can also visit us online at www.800helpfla.com for additional consumer information. Remember... consumer education is the best defense against fraud and deception. Sincerely, |
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Want to be your own boss? A franchise or business opportunity may sound appealing, especially if you have limited resources or business experience. However, you could lose a significant amount of money if you don't investigate a business carefully before you buy.
Before investing in a business opportunity:
Research the Law. The Florida Sale of Business Opportunities Act requires sellers of business opportunities to provide a disclosure document that includes the information necessary for the prospective investor to make an informed investment decision. This disclosure document must be presented at least three days prior to the time an investor signs a business opportunity contract or makes any payment. This document must include things such as: history, background and financial status of the seller, including the names of officers and general managers of the business, felony convictions, if any, and their bankruptcy history; amount of money required for the investor to get started and whether the money is refundable and under what conditions; financial arrangements and any additional fees that might be required; a statement whether the seller guarantees to buy back unsold products; etc.
Certain businesses may be exempt from the Florida Sale of Business Opportunities Act. Always check with the Department of Agriculture and Consumer Services by calling 1-800-HELP-FLA (435-7352) to see if the business is required to file a disclosure document and, if so, if the business has complied with that requirement.
Interview current owners in person. (They should be specifically listed as owners in the disclosure document.) Visiting them in person may help you identify any that are "shills" — people paid to give favorable reports. Don't rely on a list of references selected by the company because it may contain shills. Ask owners and operators how the information in the disclosure document matches their experiences with the company.
Interview current investors in person. If their names and addresses are not in the disclosure document, ask for them. Ask these investors whether information in the disclosure document matches their experience with the company. Failure or refusal to provide names and addresses of investors should serve as a warning sign that the venture may be questionable.
Investigate claims about your potential earnings. Some companies may claim that you'll earn a certain income or that existing franchisees or business opportunity purchasers earn a certain amount. Companies making earnings representations must provide you with the written basis for their claims. Be suspicious of any company that does not show you in writing how it calculates its profitability.
Get professional advice. Ask a lawyer, accountant, or business advisor to read the disclosure document and proposed contract before you agree to anything.
Make sure to take your time. Be cautious of high-pressure sales tactics. For example, if you are pressured to sign immediately "because prices will go up tomorrow," or "another buyer wants this deal," take this as a warning sign. If the business opportunity is legitimate, it will still be available after you’ve made your decision.
Get the seller's promises in writing. Any oral promises you get from a salesperson should be written into the contract you sign. If the salesperson says one thing but the contract says nothing about it or says something different, it's the contract that counts. If a seller balks at putting oral promises in writing, be alert to potential problems and consider doing business with another firm.
For more consumer information, or help finding the right resource for assistance, give us a call today at 1-800-HELP-FLA (435-7352) calling within Florida, 850-488-2221 outside of Florida, 1-800-FL-AYUDA (352-9832) en Español, and a consumer specialist will be happy to assist you. You can also visit us online at www.800helpfla.com.
Additional Resources
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Business Opportunities
Would you like to own your own business? Possibly earn lots of money? This brochure will give you tips on how to protect yourself from possible business opportunity scams. Before you invest your time and money make sure you review these helpful tips.
The links below are for your information only. The goal of the Division of Consumer Services is to provide additional information to consumers. The Florida Department of Agriculture and Consumer Services does not review or confirm these sites for accuracy.
Federal Trade Commission
Want to "be your own boss," "work from home," or just "make extra money"? Then you may be tempted by an ad for a business opportunity. Before you open your checkbook, check out the offer.
National Consumer's League
Tips from the Internet Fraud Watch
