I ran into an old business acquaintence recently who I had lost touch with a few months after I came on line in 2003. He was a real pioneer back then or should I say I did not know what it was he was doing back then but now see him as a pioneer of social/business networking groups.
Back then he was setting up a business group online and as the membership grew into a size able group in one area of teh country he would set out to see if any of the members in that area who like to have a Chapter Club for their membership. Of course he made a little business out of this where he provided them the marketing, leadership, branding and all in return for a monthly payment to him related to the number of members the chapter had. Simple enough business plan, Right?
Well, this leads to why I have not seen my acquaintence for awhile..long while actually. During his chat with me in the parking lot of a home improvement center, one of four jobs he now has to work, he told me that the concept of online business networking chapters took off and for about a year he was overseeing over fifty chapters that had on average of over 100 members each.
He reported to be making a lot of money until the first of last year when he was hauled to court for operating a franchise with out a license in each state he had a chapter. He was dragged through court in each state (25 of them) he had a chapter, found guilt on all charges in all courts, fined (what he said was a total of ‘100 times what I made’)and now is working off his fines set up from him filing personal bankrupts…he said he has about 20 more years to pay it off.
Naturally, I was about to wave over the forklift driving by to ask assistance to lift my jaw off the ground after hearing what he went through over a year. I was simply speechless but had to ask the questions he was asked a million times since then…
‘Man, didn’t you talk to an attorney before you went into business?’
It seems my long lost acquaintance is part of that still growing group of business people who feel they should not have to gain legal assistance to do business. Some are violently against using an attorney for anything and feel they know it all..like my friend here. I remember him reaming me for gaining advice from an attorney on the businesses I have set up and run.
“Why waste all that money you will never get a return on?”
What he found out after going through all of this ordeal which resulted in him having to pay a large amount of money in fines was he would have been able to legally make an even larger amount of money if he had go ahead and paid a few thousand dollars for an attorney to set up his business on firm legal ground. He now is a poster child for the ABA for what will happen to anyone who is not legally set up to run a business that is deemed a franchise.
Over the years I have run into a few other online networking groups who see the lacerative opportunities of this business model and who’s owners I have talked also feel it does not meet the definition of being a franchise, so…
“Why pay for an attorney when I don’t need one?”.
Some of them are golf groups. They maybe still running today..but for how long? Those members of those online/offline business networking groups and those who take on a chapter are also tied to same binds as the person who runs the business…or franchisor..so if he/she goes down, they all go down.. Is that worth it?
I am not an attorney and never plan on being one. However, I now know the worthiness of having an attorney. My philosophy is, if I can’t afford to pay for an attorney to help set up the business I want to do, then I probably have no business setting that business up..simple and to the point.
Think about that before thinking you can get away with something that is not legal… Let me know how I can help.
