Scam franchises usually promise a risk-free investment with immediate high returns.

Warning signs include:

• claims you can make large amounts of money quickly and with little effort or experience—i.e. ‘get rich quick’ schemes
• a reluctance to give details of the other franchisees
• franchisors/master franchisees who are reluctant to provide any written information
• a requirement that payment be made upfront before any information is released
• inconsistent financial information about the businesses profitability
• a franchise advertised with only a post office box as identification.

The ACCC strongly recommends that you reconsider a business opportunity if you see any of these warning signs. If you ignore them and accept the offer, you could fall victim to a costly scam.

However, it is important to remember that only a minority of business opportunities available in the marketplace are scams—provided you do sufficient research about a franchise opportunity, you should minimise your risk of being caught by a scam.