Franchise Fraud: Wake Up and Smell the Fine Print

Mother Jones by Stephanie Mencimer | Feb. 25, 2009 (Special Report)

Franchising—in which a firm lets independent businesspeople market and distribute goods or services in its name—certainly has its benefits. It lets the franchisor expand its market while spreading risk around, and small investors can capitalize on a proven business model. But neophyte businesspeople may not be in the best position to judge that model before committing their life savings. According to Texas franchise lawyer Richard Solomon, fraud has ... Full Story »

Posted by Derek Hawkins

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Subjects: U.S., Business
Topics: U.S. Economy
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Posted by: Posted by Derek Hawkins - Feb 25, 2009 - 1:50 AM PST
Reviewed by: Derek Hawkins (review), Brian Bucknam (review), Glenn LaBauve (review)
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Edited by: Derek Hawkins - Feb 25, 2009 - 1:50 AM PST

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Derek Hawkins
4.1
 by Derek Hawkins - Feb. 26, 2009

While clearly defending the apparently defrauded couple, Mother Jones serves up a fine feature story that was informative and brought me palpable outrage over the franchise dispute discussed in it. This is a great public interest story, fine muckraking.

Shining example of my favorite type of news story.

Derek posted this story.
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Glenn LaBauve
4.6
 by Glenn LaBauve - Feb. 26, 2009

Hidden nightmares nearly always lead to new insight.

Had there been an adequate federal regulatory body or if the victims had had the foresight to have an independent accountant or lawyer review and evaluate the business and the agreement, much of this could have been averted. In any given year I will do a few such evaluations, and with few exceptions, the model previewed by the offeree has little if any relation to reality. Some are still good once the pie in the sky is taken out, but some don't even need an indepth evaluation to ... More »

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Brian Bucknam
3.5
 by Brian Bucknam - Feb. 26, 2009

Interesting story about the perils of neophyte businessmen joining a franchise. It is worrying that the side-bar about legal fees says "In civil court, the law almost never requires a losing party to cover the winner's legal costs" in contradiction to many legal agreements I have seen.

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