Reality Check

To protect yourself from scams, follow these tips from the Federal Trade Commission (FTC) and state authorities:

FTC: Be wary of high-pressure sales tactics. You may be told that the seller's offering is limited, that there is only one territory left, or that this is a onetime reduced price. Don't feel pressured to make any commitment. A good deal today should be available tomorrow.

Florida: Look for warning signs. These include:

Claims that the profits can be achieved easily or with little work or time invested.

A required initial investment that greatly exceeds the fair market value of any products, kits or training.

A large fee payable before you receive anything in return.

Evasive answers by the salespeople or unwillingness to give disclosure documents as required by law.

Maryland: Investigate earnings claims. Any claims about earnings, sales, gross sales or income projections must be based on actual operating history and must be provided as part of the disclosure statement. A franchisor or seller is required to provide you with substantiation of any earnings claims.

This article was originally published in the July 1996 print edition of Entrepreneur with the headline: Reality Check.