This site provides New zealand Franchising Information on this powerful distribution method

 

Danger signals

• Non existence of franchise package.
• Is the franchise only an idea and a name?
• Inexperienced franchisor.
• Franchisor relying on subfranchising to finance "Master" franchise.
• Franchisor not allowing a reasonable profit to the Franchisee.
• Brochures telling of estimated profits and success stories which cannot be substantiated.
• Advertisements giving only Post Office boxes for reply.
• Promises of being able to get rich quick with little work.
• Franchisor not providing a copy of the agreement unless a non refundable deposit is paid?
• Does franchisor refuse to allow the franchisee to check out the "system" prior to signing the franchise agreement? In particular is there reference to a "confidential Operations Manual" which will not be disclosed even if a confidentiality agreement is signed?
• Refusal of the Franchisor to disclose financial details.
• Payments required to the Franchisor for advertising with no provision in the Franchise Agreement, which assures that moneys paid will be spent on such advertising.
• Non disclosure of details of other franchisees (the effect being that the prospective franchisee is unable to contact them to discuss the franchise).
• Unsuitability of franchisee by virtue of temperament or training.
• Inability of franchisee to accept the regimentation of franchise system.