Check It Out
A company's marketing materials and salespeople may not tell you everything you need to know about the opportunity. Besides reading the fine print, follow these tips to make sure the business you're getting into is legitimate and right for you.
When investigating any program in which you purchase products for resale:
*Find out if the price of any inventory you're purchasing is indeed a wholesale price. Be wary of any initial level of inventory you're required to purchase that seems higher than reasonable.
*Distributorships or dealerships aren't likely to be registered or have a disclosure document. Request financial statements, visit the headquarters and talk to other dealers.
*Make sure there's an eager, unsaturated market for any product you plan to distribute.
*If possible, test the product by purchasing a small amount of inventory. Or ask potential purchasers if they'd be interested in the type of product you're considering selling.
When investigating a licensing opportunity:
*Ask for a copy of the license agreement, and consult an attorney to understand the rights being licensed.
*If trademarks, copyrights, patents or other proprietary rights are granted with the license, make sure you understand them. Are you authorized to sell the product using the company name, or do you have to come up with your own name? Will marketing materials be supplied?
When investigating a multilevel marketing (MLM) opportunity:
*Since success depends on the product, look for a high-quality product or service for which there is a demand.
*Pyramid schemes, which require participants to make an investment or purchase in return for the right to recruit others for economic gain, are illegal. Legitimate MLM companies must be genuine retail organizations that market products or services to consumers.
*Look carefully at the upfront investment required and determine whether you think it's reasonable. Often, there is no upfront investment, except for a sales kit or demonstration materials sold at cost.
*Check for a buyback policy. Legitimate companies buy back inventory and sales kits from distributors who want to leave the program (within a reasonable time period).
When investigating a coin-operated business opportunity:
*Be wary if a seller says the machines "find their own locations."
*Some companies require you to purchase a certain number of machines; if you're not experienced, don't make a large investment.
*Be sure the market isn't saturated with the product. Visit potential locations and gauge demand before you buy.
*If you don't receive a disclosure document, find out why.--Heather Page