Two men from York have been sent to prison for running a fraudulent property business. Their scam was to set up a franchise business that sold unsuspecting people the dream of buying new build homes at discounted prices. The franchisees thought they would be able to build up a portfolio of cheap new build buy to let properties. Franchisees were supposes to receive exclusive rights to specific post code areas but this promise was broken and some areas were sold more than once. Landlord insurance clients who have built up their portfolios the hard way will know that there are no short cuts in this business and if it looks too good to be true it probably is.
In excess of 200 people complained to the North Yorkshire Police about losing money in the scam. People were paying up to £50,000 for the franchises and hoping to make high incomes from the properties. As well as offering the prospect of good financial returns the franchisor was promising training and support that did not materialise.
One defendant was jailed for four years two months and the other for three years eight months. One of the men had been sent to prison in 1991 for deception and forgery. Franchising can be a great way to run your own business if you want to start up on your own but want to have an experienced organization behind you that can give you training and support. However you need to be very careful about who you trust with you money. Do your homework and speak to existing franchisees before signing up.