By Ana Margarita Olar | Negosentro.com |
Franchising is one of the most common options when you are new to the business. Sadly, some franchises are just scam companies.
So to guide you, here are some tips to spot a legit franchising company:
- Legit franchising companies have updated legal papers and permits issued by the government and concerned agencies such as:
- Department of Trade and Industry for sole proprietorship and SEC for partnership and
- Up to date, mayor’s permit
- Local Permits such as Sanitary, Building, Occupancy, etc.
- Registered at the Bureau of Internal Revenue
- Proper certification from the appropriate government agency such as BFAD and DOH for food business, TESDA, DEPED, DSWD, and CHED for schools and training business,
- Registration from the Intellectual Property Office.
All of these papers must bear the consistent name of the franchise and the owner.
- A legit franchising company has a written contract of agreement that is ready for your review. Under the franchise rule, you must receive the FDD or Franchise Disclosure Document at least 14 days before you are asked to sign any contract or pay any money.
- A legit franchising company has been running for at least 2 years with a constant company name and bears the same logo etc.
- A legit franchising company has at least 2 or more owned branches and 2 or more franchise outlets. You can also research the franchise review of these two outlets if they are satisfied with the company or not and the reasons behind it.
- It should have an exact head office location consistent with what transpires with its documents. The office must be readily accessible or reachable in case you have queries or clarifications. You can also check whether this address is consistent with what is registered on their documents.
- It should have a Business Operation Support such as Management, Marketing, and Logistics and other possible support that the owner can extend to the franchisee. A legit franchising company offers two benefits: one, a proven system for doing business, with training in management strategies and business accounting, and how to utilize local and national marketing programs, and two: support services offered by the brand to increase your chance of success.
- The company must have its own accredited list of material suppliers. A legit franchiser protects and upholds the quality of their products and so does not allow their franchisee to purchase substandard raw material from non-accredited stores or suppliers.
- It must be a member of AFFI( Association of Filipino Franchisers Incorporated or (PFA) Philippine Franchising Association.
One simple trick that most common people get scammed is when they get to attend a “business orientation” seminar that comes with “freebies” they feel that they are obligated to pay at once.
Being scammed or not is your choice, no matter what a friend or an acquaintance tells you, don’t get into franchising without consulting others about it and without thinking twice.
It’s better to walk away than to plunge in and be left dangling in the air empty handed.