Evaluating & Buying a Franchise

Pushing the Envelope: Avoiding Envelope-Stuffing Franchise Scams

If you want to become a franchise owner, taking the time to narrow down your options through patient and thorough research is a small price to pay.

Earning a large salary from completing a simple task is appealing, but before you send in your check remember to do your homework.

You may recall stuffing envelopes for your father or a neighbor growing up. It was easy work but time consuming and tedious. You happily overlooked the paper cuts and gummy tongue for that $5 reward -- $10 if you were lucky. Today, a meager pittance won't justify the endless hours of clerical drudge. So when you see ads claiming $3,000 a week incomes from owning an envelope stuffing franchise, it's worth investigating.

Investigate Envelope-Stuffing Franchises First "Investigating" is the operative word when it comes to envelope stuffing franchises. These business opportunities are appealing because you can run your business from home without extensive training or skills and they usually require only a minimal capital investment. The FTC warns would-be envelope stuffers to beware: the companies offering these opportunities don't always reveal the whole picture.

This is where due diligence pays off. If you haven't heard this term previously, expect to hear it often throughout your franchise exploration process. Due diligence, or doing your "homework", is considerably the most important step of selecting a franchise. Beyond industry and reputation, due diligence will protect you from making a critical-and costly-business decision.

In many cases, after you send the money to start your home-based envelope-stuffing franchise, the "franchisor", or the person who placed the original ad that caught your attention, will send a letter to you with instructions on how to carry out your own version of the scam. By then it's too late - you're check is as good as cashed.

Before You Sign

Before you send any money to a company selling envelope stuffing franchises ask them the following questions:

Who will pay me? You should have a clear picture about where the revenue stream originates. Who is paying to have envelopes stuffed? Do you have to find your own customers?
What is the total cost of buying a franchise including supplies, equipment and royalties?
What tasks will I have to perform? Find out what happens to the envelopes after you stuff them. If the franchise is a scam, the franchisor will not have the right answers.

Don't Get Ripped-off by Envelope-Stuffing Scams Asking these questions may assist you in deciding if an envelope-stuffing opportunity is legitimate; however, you shouldn't end your investigation there. Contact your local consumer protection agency, state Attorney General, and the chamber of commerce and Better Business Bureau in the community where the company is located, as well as where you live. Look for complaints, especially those left unresolved or resulting in criminal charges or legal action. If a company lacks complaints it doesn't mean the offering is legitimate. Companies operating below board sometimes settle complaints out of court, change their names, or change jurisdictions to avoid detection.

The Franchise Offering Circular

This is one of the most important documents in the franchise buying process. Any franchise advisor will tell you never to invest a single penny in a franchise opportunity without seeing the Franchise Offering Circular or FOC. Under the FTC's Franchise Rule, you must receive the document at least 10 business days before you are asked to sign any contract or pay any money to the franchisor. Read the entire disclosure document and make sure you understand what it means. If you are unclear about any portion of the FOC, consult a franchise attorney.

Pass the Envelope Please

Unfortunately there are individuals only out to "earn" a fast dollar, making recruiting efforts more difficult for legitimate franchisors, as well as creating investigative legwork for prospective franchisees. If you want to become a franchise owner, taking the time to narrow down your options through patient and thorough research is a small price to pay.

Where to Get Help

The Federal Trade Commission works to prevent fraud and deception. Call 1-877-FTC-HELP (1-877-382-4357) or visit the FTC website.
The Attorney General's office in your state or the state where the company is located. The office will be able to tell you whether you're protected by any state law that may regulate work-at-home franchises.
Your local consumer protection offices.
Your local Better Business Bureau.
The postmaster. The U.S. Postal Service investigates fraudulent mail practices.
The advertising manager of the publication that ran the advertisement for the franchise opportunity. The manager may be interested to learn about the problems you've had with the company, as it may negatively impact the publication's reputation.