Richard A. Solomon is a Texas lawyer with over 40 years of legal experience, including the areas of franchising and business opportunities. He has seven fraud tutorials on his website. Richard pulls no punches and I am going to quote some of what he said about business opportunities due diligence and fraud.
The problem with which I am usually faced when a potential franchise investor comes to me for counseling is that the investor is already a totally pre-sold glob of quivering protoplasm, just itching to write that big check. Salesmanship is very aggressive here. Misrepresentations abound. A suggestion that what the client is enthused about may not be anything like it has been described is a very deflating event, and sometimes the client is so sold that the investment is made anyway, and the results occur that were predicted. By then it is either too late to get the money back for any number of reasons; the client no longer has money to hire a lawyer to seek redress anyway; and a terrible loss of money and emotional energy for the investor and for the investor’s family simply destroys everything. The people selling these opportunities are very tough. The investor needs to have access to tough analytical resources to deal with it.’
Over and over again, I have emphasized that you cannot perform due diligence during the 10 or 14 day cooling off period you are permitted by law. If you start your due diligence after a trade show, then just go to a casino and bet your house on red - at least you’ll know where your money went.
What else does Richard have to say about due diligence? Check it out!
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