QUESTIONS AND FURTHER INFORMATION Questions concerning franchise registration should be directed to the Minnesota Department of Commerce at the address and telephone number provided in the Resource Directory section of this Guide. Refer to the Minnesota Franchise Act and Minn. Rules 2860. The North American Securities Administrators Association, Inc. (NASSA) UFOC Guidelines (including forms) can be downloaded from a link on the Minnesota Department of Commerce at Franchises.
EVALUATING A BUSINESS OPPORTUNITY
SOME GENERAL CONSIDERATIONS When buying an existing business, investing in a franchise, or beginning a new business, the entrepreneur should thoroughly evaluate the business opportunity he or she is considering. This step is very important but often overlooked; many times, a person’s hopes for a business cloud his or her judgment. It is not uncommon for an entrepreneur to invest a substantial sum in a business without analyzing whether the business opportunity is a viable one. In addition, it is not uncommon for an unscrupulous business promoter to take advantage of such an entrepreneur. Although there are no foolproof steps to take in evaluating a business, this section of this Guide will offer guidance on the types of questions to ask, and sources of information to review, before investing in a new business (whether or not it is a franchise) or buying an existing business. Assuming that after evaluating the opportunity the entrepreneur still wants to proceed, the sections of this Guide on Accounting for the New Business – Income Forecasting Techniques, and on Business Plans, should be consulted. It is worth emphasizing here that an entrepreneur’s analysis and evaluation should occur before he or she makes any kind of commitment (even oral), whether contractual or financial, to the business, or makes any payment, of any size, in connection with the business. In any event, a potential entrepreneur should carefully avoid obligating himself or herself to participating in any business opportunity, in any way, without first evaluating that opportunity. SOURCES OF INFORMATION One source of information is the Minnesota Attorney General, phone 651-296-3353, and the Better Business Bureau, phone 651-699-1111, to determine if any complaints have been filed in connection with that business. Also, the National Consumer League’s (NCL), Fraud Center is a private, nonprofit organization that operates a consumer hotline to provide service and assistance in filing complaints against unscrupulous business operators. The NCL helps the FTC and state Attorneys General by entering complaints into a computerized database to help track and identify operators of business frauds. Contact the Fraud Center online at Fraud.org. These are prudent, but not foolproof, steps in evaluating any business opportunity.
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