Investigate Before You
pressure sales tactics, and don't purchase anything in a hurry. Legitimate
companies will expect you to investigate their offering and comparison shop.
and business opportunities involve a substantial investment. Take the time and
spend the money to seek competent legal advice before investing. Have a lawyer
review the contracts or agreements before you give the seller any money. You are
better off spending money now to learn that there are no problems. You could be
spending thousands later if problems arise.
It is against the
law for anyone to sell a franchise in Maryland that is not registered with the
Securities Division. It is also unlawful to sell a franchise by fraudulent
means. Inquire about the franchisor's registration, and then call the Division
It is against the
law to sell a business opportunity without first filing the appropriate
documents with the Division. It is also unlawful to sell a business opportunity
by fraudulent means. Inquire about whether the seller has filed with the
Division, then call us to check.
and sellers of business opportunities are required to give you an offering
circular or "disclosure statement" at the first personal meeting or at least 10
business days before you sign a contract or pay any money.
statement must contain specific information including the history and background
experience of the franchisor/seller; the identity of corporate officers; the
company's and the officers' litigation history; the amount of your initial
investment; the parties' obligations to each other; copies of all contracts or
purchase agreements; and copies of the franchisor's/seller's financial
Make sure you get
a disclosure statement, and then read ALL of this information carefully. Do not
sign a contract or pay any money until you have had the opportunity to review
the disclosure statement. Also remember that oral statements and promises that
are not also in the disclosure statement mean nothing.
About Earnings and Profits
It is against the
law for a franchisor or seller of a business opportunity to give you information
about potential earnings or profits without a factual basis for that
information. Any claims about earnings, sales, gross sales or projections of
income must be based upon actual operating history and must be provided as part
of the disclosure statement. A franchisor or seller is required by law to
provide you with substantiation of any earnings claims. If you are given
information about earnings or profits that is not also in the disclosure
statement, treat that information as suspect.
also required to provide you with the names, addresses, and telephone numbers of
at least 100 nearby franchisees. Contact and talk to as many franchisees as
you can. This information can you give you a clearer picture of how a
franchise system actually operates.
Are you registered
with the Maryland Securities Division?
Do you have an
offering circular or disclosure statement? When are you giving them out?
How long have you
been in this business?
How many franchise
outlets currently exist (or how many business opportunities have you sold)?
Where are they located?
How many financial
outlets have closed or transferred? How many buyers of the business opportunity
have asked for refunds?
What do your
financial statements reflect? What assurances do I have that you can continue to
provide and stand behind the products or services I am buying?
How much is your
initial fee? Are there continuing fees and royalty payments?
assistance do you provide?
How much can I
afford to invest?
Do I have the
necessary background and skills to successfully operate this business or
Am I able and
willing to follow the rules and restrictions imposed by the franchisor or
Do I understand
every part of the agreement I am asked to sign. Have I sought the advice of a
lawyer, accountant or other counselor?
Have I checked out
this company with the Maryland Securities Division?
Have I been given
at least 10 business days to review both the agreement and the offering circular
or disclosure statement?
Have I talked to
as many of the existing franchisees/buyers as I can? Have I asked those persons
everything I want to know about this franchise or business opportunity such
What was their
total initial investment?
Were there any
franchisor/seller fulfull all of its obligations?
Was the training
what was expected?
If the franchisor
or seller is making claims about potential income or earnings, is this
information also contained in the offering circular or disclosure
Am I being
pressured to sign a contract or pay a deposit before I have had the time I would
like to thoroughly investigate this franchise or business opportunity?
Make an Informed
franchise or business opportunity is a serious investment and should be done
only after you have considered all the relevant facts and information.
Take the time
to make an informed decision. Before purchasing, please call us to verity that
the franchise or business opportunity is registered and to inquire about any
complaints filed against the franchisor or seller.
Call us. We're here
to help!The Maryland Securities Division(410) 576-6882
200 St. Paul Place, Baltimore, MD 21202
410-576-6300 / 1-888-743-0023 toll-free / TDD: 410-576-6372