Hanep Buhay: How to identify a fake franchising company

HANEP BUHAY is the first business reality-magazine show on Philippine TV that aims to empower every Pinoy with knowledge on how to manage funds, start-up a business, and make better money decisions. Hosts Chris Tiu and Love Añover will be your new ka-partner in business every Saturday morning! LAST WEEK, WE GAVE YOU THE TOP 10 QUALIFICATIONS FOR A LEGITIMATE FRANCHISE COMPANY, THIS WEEK, WE’LL GIVE YOU TIPS ON HOW TO SPOT A SCAM! HERE ARE SOME DANGER SIGNS TO WATCH OUT FOR: 1. Incomplete Legal Papers. They might have legal papers, however some of it might be lacking. For example, they may have BIR Registration and DTI Permits but they don’t have a certification from DOH or BFAD if they are running a food related concept. 2. Discrepancy and inconsistency in the declaration of Business Details in the legal papers. For example, the Office Address in the BIR Registration is different from the address that appears in the Official Receipt. 3. Trademarks, Logos, Slogans are not registered with the Intellectual Property Office of the Philippines. 4. The Franchise Agreement is not detailed or they don’t have a Franchise Agreement at all. 5. The Sales Officer is rushing you to sign the contract without giving you time to evaluate or seek legal advice. 6. No permanent business address. The Franchise Office has a history of transferring its business operations from one place to another within a few years of existence. 7. The company includes irrelevant items in the business package. For instance, a food cart that includes beauty products in the Franchise Package. 8. The company requires or encourages the prospective franchisee to recruit additional clients in exchange for some perks. Sometimes pseudo franchisers create a pyramiding system that gives bonuses for every successful client referral. This activity diverts the attention of the franchisee to focus on recruiting people instead of managing the Franchise or promoting the brand. 9. Does not issue Official Receipts in every purchase made by the Franchisee. 10. Does not have sufficient suppliers that would sustain the product needs of the Franchisee. 11. They usually allow their Franchisee to purchase raw supplies from the nearest market. A legitimate Franchiser protects the quality of their product and does not allow their Franchisee to purchase non-quality raw materials/ ingredients from the nearest store. 12. Pseudo franchisers give unrealistic promises. They usually promise a guarantee that there will be a return of investment in a short span of time. Or sometimes they promise that a Franchisee will become a millionaire in the soonest possible time. 13. The Operational Support is too limited. There is no Feasibility Study. 14. The Franchiser is not willing to meet the potential Franchisee personally. 15. The amount in the Investment Breakdown presented is way off from the actual investment cost that they will ask you to pay. DON’T HESITATE TO CALL THE DEPARTMENT OF TRADE AND INDUSTRY AT 751- 3330 AND VERIFY DETAILS ABOUT THE COMPANY THAT YOU WANT TO INVEST IN. YOU MAY ALSO GET IN TOUCH WITH THE ASSOCIATION OF FILIPINO FRANCHISERS INC (AFFI) OFFICE 0917 518 2334, 900-0002 LOC. 121 TO DOUBLE CHECK IF THE SAID COMPANY IS A MEMBER. WITH THIS ADDITIONAL KNOWLEDGE, YOU’RE ASSURED OF PROTECTING YOUR MONEY FROM FAKE COMPANIES AND IT’S ONE MORE HANEP STEP IN BEING A SMART ENTRE-PINOY! SOURCE: Rafael Galang Canare Executive Director