One major issue not being addressed right now in the regulatory definitions which guide consumers and lawyers in business opportunities and franchising is the new term being used; Private Franchising. The Federal Trade Commission decided it would revise its definitions of such opportunities in 1995, but failed to address this issue. The use of the term; Private Franchising has grown over the years.
There now exist some fraudulent activity going on in coffee shops across America with regards to multi-level marketing recruiters using this term, which disquisitions their business model as something it is clearly not. It shows that consumers have grown wise to MLM business opportunity sales tactics and there since that form of virus has hijacked a new host (franchise industry model) and modified its intended definition. This is happening where the salesman, MLM recruiter calls their business a "Private Franchise" and then spends about 20 minutes of the presentation discussing the incredible success of McDonalds and other franchising veterans prior to drawing circles on paper and making forward looking statements about their parent Company, without presenting a full audit and then make alert calls to the potential signer up of the MLM program. The circles have names like Diamond, Emerald, Ruby, Direct, Etc. All in line with the typical MLM sales plan and methodology.
This is not a franchise, not even close in the Federal Trade Commission definition, yet due to the lack of guidance in true definitions, the words; "Private Franchise" has been adopted and the word "franchise" is used through these loud presentations in coffee shops across America each day. As a matter of fact it is hard to sit in a coffee shop anywhere in this country without hearing one of these presentation on any given day. See for yourself. A failure to completely separate the entangled business models in the Federal Trade Commission's definition does so at the detriment of the consumer. The Federal Trade Commission's job is to educate protect the consumer, yet it is failing to act to this new biological threat which may harm the current complex life form of the Modern Franchise business model. The consumer begins to realize that somehow an MLM business is exactly the same as a franchise. That they will receive the same things, expect the same things and receive similar presentations.
This is false and misleading to the consumer and unfortunate for the ethical franchisors and franchising industry. Think about it.