Ken Kindt has gone one step
further at Signworld. Instead of creating computer- generated
signs, he now spends his workdays signing up new licensees.
There are 122 and one of them is Cynthia Ramsey, past president
of the San Francisco chapter of the National Association of
Women Business Owners.
Business opportunities, also
called ``Seller Assisted Marketing Plans,'' or SAMPs, can
be a portal to profits and entrepreneurial independence. But
before signing any documents or forking over any money, it
is essential to do careful research.
The business opportunity arena
is full of scams. Instead of cleaning up, many a buyer has
been cleaned out.
A business opportunity is
like a franchise but without many of the costs and protections.
Both services offer would-be entrepreneurs a business model
and some training and supplies so that they do not have to
start their enterprise from scratch.
But there are major differences.
Franchisors provide continuing support and take from 6 to
10 percent of revenues in royalty payments. Promoters of business
opportunities, on the other hand, typically charge a one-time
fee and offer minimal hand-holding after an initial training
Disclosure requirements are
dramatically different, too. Franchisors must provide prospective
buyers a Uniform Franchise Offering Circular that details
the business and an annual list of all franchise owners with
their addresses and phone numbers. New buyers can easily contact
current franchisees to assess how they are doing and ask whether
they would do it again.
By contrast, business opportunities
have no uniform filing requirements, and they are governed
by state attorney general departments rather than the department
``Beware,'' advises Gayle
Weller, the Seller Assisted Marketing Plan enforcement officer
for the California attorney general's office. For starters,
only deal with business opportunities that are registered
in your state. In California, only about 110 are registered.
Although registration is a
safeguard, it is no guarantee. ``Even companies that appear
to be complying can be leading people down the garden path,''
Weller said. Special problem areas include medical billing
scams, pyramid sales schemes involving cleaning materials
and bogus vending machine opportunities.
Recently, Southern California
has been besieged by work-at-home medical billing schemes
that have snookered thousands of consumers out of more than
Ads suggest that for an investment
of $250 to $7,000, buyers can get software to handle insurance
claims and bills for doctors and make perhaps $30,000 a year
serving medical groups who are hungry for such services.
But Weller said the software
is often ``crummy.'' The list of doctors who supposedly want
the service are typically culled from medical directories
and have no interest. Finally, the promise of refunds after
a 90-day product trial is often a sham because fees paid by
credit card cannot be disputed after that length of time.
Northern California has its
share of business opportunity abuses. In February, a criminal
trial is set for San Francisco Superior Court against Edward
A. Durante, Walter J. Zink and one other owner of the defunct
X.clusive Vending Inc.
The state charges the trio
with violating Seller Assisted Marketing Plan laws and grand
theft for allegedly misrepresenting X.clusive's business and
profit potential and using other tactics to bilk dozens of
buyers out of several million dollars.