International Law

Why are you buying that?

Image by wallyg via Flickr

Les Stewart has very important observation relevant to purchasing franchise due diligence from attorneys:

"Credence goods relationships are commercial exchanges that have the following characteristics:

1. the buyer cannot tell really well if he has a problem (can't diagnose),
2. the buyer does not know how much of the good or service he needs to fix a problem (can't assign appropriate resources to solve problem),
3. the buyer cannot judge the quality of the service they need or have received (even after paying for it) and
4. the person providing the service knows your vulnerability and tends therefore (even sometimes unintentionally) to and persuade you what is in their (as opposed to your) best interests (see Credence Goods attracts Experts who Cheat).

Some examples in every day life are: your vitamin supplements, car mechanic, doctor, lawyer,  and accountant.

Credence goods have a very, very important role to play in franchising."

How do you buy a service if you cannot judge the quality of the service?

Full post as published by Misleading Advertising Law on November 26, 2008 (boomark / email).