Cashing in on the ever-growing popularity of Baba Ramdev’s Patanjali products, the cyber criminals have floated fake websites (like www.patanjalidistributors.org) and are duping gullible investors by offering distributorship of the brand for Rs 10 lakh. Entering into a proven business model with all the required tools sounds alluring. There is a wide variety of franchising opportunities and these provide a stable base for successful business ventures. But with rise in franchising system, there has been a significant rise in franchise frauds.
Many cases of Franchise fraud have been seen such as a woman in Ahmedabad was lured with fake Patanjali store franchise offer and was conned of Rs 81K. Similar case is also seen in which the cyber crime branch of Noida Police received a complaint from a trader in Sector 63, who was duped by the website www.patanjalidistributors.org on the pretext of offering dealership of ayurvedic products anywhere in Noida. A senior police officer said the proprietor of Katyayani Trades in Noida’s Sector 63 was contacted by the operator of the alleged fake website and offered distributorship for Rs 10 lakh. When the owner, R K Verma, paid the money, the cyber criminals stopped responding to his calls and emails.
The fake site is identical to the real one and even has pictures of Baba Ramdev, Acharya Balkrishna and Patanjali products displayed on its home page. “It is difficult to make out the difference between the real and the fake website,” said a senior police officer.
“Be aware of the fake website www.patanjalidistributors.org, offering Patanjali distributorship asking money in lakhs. FIR registered in Noida. Please share to save others,” tweeted Vivek Ranjan Rai, head of the cyber wing. Interestingly, the website was being operated from the bordering areas of Orissa and Chhattisgarh. Noida police said the operator of the website has several bank accounts in different states of the country.
How to avoid Franchise fraud
Lack of Transparency
Make sure that your franchisor always maintains transparency in all the business dealings at every stage. A genuine franchisor will always give the time to conduct research and do their due diligence before entering into the agreement.
Talk to existing franchisees
The best way to get information about any franchise is to visit the existing franchise stores. Contact them and clear all the queries you have about the business. This is the best source to get to know about their lives as franchisees and evaluating how well a franchisor supports them.
The most important step to avoid a franchisee fraud is to thoroughly check the disclosure form. You must be provided with a detailed disclosure document, which contains important information regarding the franchise.
If they don’t provide this to you or if they refrain from providing the information you need, this should be considered as a red flag. Franchisees should never sign a franchise agreement without full disclosure
In addition to the disclosure document, a prospective franchisee should also be provided a 14 day disclosure period. A franchisee agreement cannot be signed within this time span. If the Franchisor urges you to make a quick decision about entering the franchise, it’s something you should be worry about.
These mandatory periods are provided to give franchisees the opportunity to research, review disclosed materials, and make a well-informed decision about whether they should or not be part of that franchise.
Verify the documents
It is highly advisable to verify all your legal documents by a specialist lawyer. They will help you in reviewing franchise agreements and will be able to tell you if there is anything unusual in the agreement that may require further explanation from the franchisor.