International Law

Criminal Charges laid against Fake Franchisors

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The news that five individuals working for the business opportunity seller Global Resources, originally charged with violating Florida's business opportuity disclosure laws, are now facing a criminal indictment is welcome news.

The global resources indictment against Stewart Pope of Seminole, Fla.; John Maginnis of Miami; Lisa Cohan of Ft. Lauderdale; Laura Fadlon aka "Laura Sadlon" of North Miami; Larry Taylor and Frank DiMezza, both of Long Beach, California makes for fascinating reading, especially if you are a franchisee prospect.

The actual principal of the Global Resources, nominallly Stuart Pope, was never disclosed to the prospects.

Prospects who had passed on the opportunity were phoned back after several weeks and told that "discounted" machines were available because of a cancelled order, but only for a short period of time.

But the most important warning sign for any prosepctive franchisee is this: the purchasers were advised that no selling was needed, that they only need to visit their locations to restock and collect the money.

That sounds like an employee's job - if such a job really existed, then Global Resources should not have been selling business opportunities, it only needed employees.

This is point is key for any prospective franchisee.  What local expertise do you have which the franchisor cannot obtain by training an employee?  If you cannot answer that question, you have no business purchasing a franchise.  If the franchisor cannot asnwer that question, it has no buisness in selling franchises as opposed to building corporate stores.

Full post as published by Misleading Advertising Law on January 15, 2009 (boomark / email).