Perspective | Identifying and Combating Quick Money Scams

Operators of fast recruitment scams often lack mature business models and actual operational capabilities, but they will create or package a new brand in a short period of time to gain the trust of franchisees. They often take advantage of franchisees' trust in well-known brands and adopt a "close-to-big-name" approach: for example, they set up names similar to those of well-known chains or falsely claim to be their sub-brands, or even create fake recruitment websites to impersonate well-known brands. Through these means, they fabricate brand influence and operational capabilities. When investors search online for well-known brand franchises, they often mistakenly enter these phishing websites and leave their contact information, and then people claiming to be headquarters personnel will contact them, claiming that the well-known brand has high franchise fees or that the quota is full, and recommend a certain unknown brand such as a "newly launched brand by the group" or a "new generation sub-brand," claiming that the investment is small and the return is high, luring entrepreneurs to take the bait. In fact, these new brands often have no direct store operating foundation and are completely fictitious projects designed to make money. It should be emphasized that, according to the Regulations on the Management of Commercial Franchise Operations in China, 《Commercial Franchise Management Regulations》 , franchisors engaging in franchise operations must have at least two directly operated stores and have been in operation for more than one year. In other words, the brand headquarters that legally conduct franchise business must have mature direct operation experience. However, in order to profit in the short term, fast recruitment companies often conduct frantic recruitment without directly operated stores or with less than one year of operation, which itself violates relevant requirements. At the same time, they may not register with the competent commercial authorities in accordance with regulations, attempting to evade regulatory oversight. This disregard for qualification thresholds and illegal conduct of franchise operations has become one of the significant legal characteristics of fast recruitment scams.

Fast recruitment scam companies are well-versed in marketing hype, exaggerating profit prospects, and fabricating attractive entrepreneurial stories. For example, common titles on the Internet include: "Small fast-food restaurant with monthly revenue of 500,000 yuan" and "00-post girl starts a barbecue business and achieves financial freedom." Criminals use the banner of "small investment, high return, quick return on investment" to attract people with entrepreneurial enthusiasm. They usually promise ultra-high gross profit margins, daily turnover of several thousand yuan, and cost recovery within half a year. At the same time, fraudulent advertising is rampant in the promotion process, including fabrication of product effects and profit data, and deceptive statements about cooperation backgrounds. According to Article 4 of the Advertising Law of the People's Republic of China: "Advertisements shall not contain false or misleading content, and shall not deceive or mislead consumers." However, in order to make money, fast recruitment companies arbitrarily release various misleading advertisements, which constitutes false advertising. For example, in a milk tea franchise scam, the criminal gang falsely claimed that the brand they promoted belonged to the same group or had a cooperative relationship with a well-known brand, providing false authorization documents to deceive franchisees into signing contracts and paying fees. These actions not only constitute fraud in civil matters, but also violate the provisions of the Advertising Law in administrative matters, and in serious cases, they may constitute the crime of contract fraud, violating criminal law.

In order to create the illusion of booming business, fast recruitment companies will also conduct scene arrangement and hype promotion. For example, they invest in creating luxurious model stores or offices, hanging various "authorization plaques" and "honor certificates," playing celebrity endorsement promotional videos, etc., to gain the trust of franchisees. Some well-funded fast recruitment companies even invite well-known traffic stars to endorse their brands, using the star halo to endorse the brand. For example, in the Wanyu Group major franchise fraud case, the group's fictitious brands such as "Tai Pu Milk Tea," Cha Yan Guang Nian " and "Cha Zhi Lan" all hired film and television stars as spokespersons, and many franchisees were only relieved of their vigilance and fell into the trap because they saw the star endorsements. In addition, hiring people to pretend to be customers queuing up is also a common trick—for example, a certain milk tea brand produced a large number of promotional materials, and when franchisees came to conduct on-site inspections, they hired people to pretend to be consumers to queue up in front of the store at a price of 40 to 80 yuan per person per day, creating the illusion of a bustling scene. Through this false and boastful marketing hype, uninformed entrepreneurs are easily misled into thinking that they have seized a promising business opportunity.

After franchisees are attracted to sign contracts and pay high franchise fees, fast recruitment companies often have no sincerity in fulfilling their previous promises of support and service. They usually change their faces immediately after the franchisees pay the money: the previously promised site selection guidance, personnel training, operational management, and marketing promotion "full support" are either non-existent or extremely perfunctory. Many franchisees find that the brand they franchised has very low brand awareness, and the raw materials provided by the company are not only more than twice the market price, but the quality is far inferior to the samples claimed; the so-called marketing plan is simply a template pieced together from the Internet; even the store design and site selection suggestions are unprofessional and perfunctory, not only failing to provide any practical help, but also leading to unsustainable business in the later stages due to low design aesthetics and poor location. As a result, after the franchise store opens, the business is far less booming than depicted in the advertisement, product sales are sluggish, and inventory is piling up, causing franchisees to fall into continuous losses. When franchisees request the headquarters to repurchase unsold materials or provide support, they only receive evasive answers or even lose contact.

Worse yet, quick-money scams are often not satisfied with a one-time franchise fee, but rather meticulously design a "full-chain" profit model to continuously exploit franchisees. For example, they require franchise stores to compulsorily purchase equipment and materials at high prices from headquarters. These materials are several times more expensive than market prices, yet of inferior quality, allowing them to make exorbitant profits. Some also set up so-called "value-added service" traps, such as charging training fees, management fees, advertising fees, and other fees under various names, but without providing any substantial service. By collecting money through franchise fees, equipment and material fees, and subsequent service fees, the quick-money gangs achieve the maximum degree of plunder of franchisees' investments. In the Suzhou "Sa Moubao/Mai Moude" quick-money fraud case, audits revealed that the prices of materials sold to franchisees by the two companies involved were one to two times higher than market prices, resulting in excessively high operating costs and long-term losses for franchisees; while the fees paid by franchisees were not actually invested in brand operations, but were distributed proportionally among the two brand companies and the third-party company responsible for recruitment, with as much as 76% of the profits going to the recruitment company. This shows that behind many quick-money scams, there is a gray industrial chain where recruitment companies and brand owners collude: brand owners provide the pretense and venue, recruitment intermediaries provide sales teams for rapid promotion of franchises, and both parties conspire to defraud franchise fees and share the illegal gains.

Since quick-money companies do not intend to operate the brand or grow with franchisees in the long term, but rather aim to defraud money, once the value of the brand is exhausted or negative complaints increase, they often quickly withdraw and then reappear under a different guise. In practice, it is common that when the first batch of franchisees suffer losses and close their stores, and begin to complain and report, the fraudulent company often transfers funds, cancels or abandons the existing company, making it impossible for franchisees to claim compensation. At the same time, the members of the fraud gang change the company name or start a new business, repackage and launch a new brand, repeating the above routine to continue defrauding a new batch of investors' money. For example, in the aforementioned "Wan Yu Group" case, after discovering that franchisees were complaining and filing lawsuits, the criminal gang immediately evaded their refund obligations by transferring funds, and then used the same method to launch a new brand to defraud. It is this strategy of "hitting and running" that causes many franchisees, even if they win the lawsuit, to find that the company has long since disappeared and assets have been transferred, making it difficult to enforce the judgment. At the same time, quick-money gangs often set up layers of related companies to avoid legal accountability: some are responsible for brand packaging, some are responsible for recruitment and promotion, and the companies appear to be unrelated on the surface, but are actually controlled by the same group of people, making it difficult for law enforcement officers to immediately uncover the entire chain.

In summary, "quick-money scams" have the legal characteristics of high concealment and fraud: they appear to be legitimate under the guise of commercial franchising, but in fact do not have the corresponding qualifications; they use contracts as a pretense, but in essence, from the outset, aim to illegally possess the property of franchisees. Their typical operating model includes deceptive and exaggerated advertising—signing contracts and collecting payments—failure to fulfill promises leading to franchisee failure—absconding with the money and starting anew. This series of actions often violates multiple laws and regulations at the same time: it may constitute civil contract fraud and breach of contract, and also violates administrative regulatory requirements (operating without a license, operating without registration, publishing false advertisements, etc.), and serious cases violate the provisions of the Criminal Law concerning fraud crimes. Because of their great social harm, quick-money scams have become a major problem and focus of law enforcement in the catering franchising industry. The catering industry is a severely affected area, but the same quick-money model also appears in other industries such as retail. For example, similar scams have also occurred in some retail chain store franchises and milk tea franchises, and even the rapidly expanding braised food chain brand " Meet Little Yellow Duck " has been investigated by the public security organs for suspected illegal absorption of public deposits. In response, regulatory authorities have been increasing their efforts to crack down on this in recent years. In 2023, the Ministry of Commerce, together with the Cyberspace Administration of China, the Ministry of Public Security, the State Administration for Market Regulation, and the State Intellectual Property Office, issued the "Notice on Improving the Comprehensive Supervision System and Promoting the Orderly Development of Commercial Franchising (Draft for Comments)", which clearly requires that franchising in the beverage, catering, and retail industries be subject to key supervision in accordance with the law and regulations. Local commerce, market regulation, and public security organs have also launched joint special clean-up and rectification actions to strengthen the crackdown and rectification of irregularities in franchising. At the judicial level, there have also been precedents where quick-money behavior has been directly classified as a fraudulent crime, reflecting the judicial organs' "zero tolerance" attitude towards such scams.

Franchisees who have encountered quick-money scams often face the predicament of store losses and debt due to lack of business support and experience. In this situation, franchisees can consider the following civil, administrative, and criminal remedies.

If franchisees can prove that they signed the franchise contract under the fraud and misleading of the other party, they have the right to legally claim rescission of the contract. The relevant provisions of the Contract Law of the Civil Code clearly state that for contracts concluded due to fraud by one party, the victim has the right to request the people's court or arbitration institution to rescind the contract. In fact, most franchise contracts in quick-money scams are signed under the inducement of false statements, which meet the conditions for rescission of the contract. Franchisees should exercise their right of rescission within the statutory time limit (generally within one year from the date they knew or should have known of the fraudulent facts) to avoid losing the opportunity. Once the rescission of the contract is supported, the contract is void ab initio, and both parties should return to the state before the contract was signed—franchisees have the right to demand the return of the franchise fee and other payments already paid, and can also claim compensation for losses caused by the other party's fraudulent behavior.

In addition, even if there is insufficient evidence of fraud to rescind the contract, franchisees can also consider terminating the contract based on the other party's breach of contract. Quick-money companies often seriously violate the contract (such as failing to fulfill their obligations regarding training, delivery, and advertising support). According to Article 563 of the Civil Code, if one party delays in performing its main obligations or engages in other breaches of contract that prevent the purpose of the contract from being achieved, the party that has performed its obligations has the right to terminate the contract. Franchisees can terminate the contract by notifying the other party of a fundamental breach of contract and demand the return of funds and compensation for losses. In judicial practice, many courts, when handling such disputes, have ruled to terminate the contract, requiring the brand party to return the franchise fee and compensate for the corresponding losses. In particular, according to Article 23 of the "Regulations on the Administration of Commercial Franchising," if the franchisor conceals relevant information or provides false information, the franchisee may terminate the franchise contract. If the quick-money company fails to fulfill its information disclosure obligations before franchising and makes false statements about important matters, the franchisee has a clear legal basis for claiming termination of the contract. It should be noted that if claiming the contract is invalid or rescinded, the franchisee can claim the return of the payment and interest through unjust enrichment or a claim for breach of contract to demand the return of the payment and interest; if claiming termination of the contract and breach of contract by the other party, then the breaching party can be required to compensate for losses, including direct losses such as franchise fees, equipment purchase fees, and store decoration investment, as well as lost profits due to breach of contract (within a reasonably foreseeable range).

In some cases, franchisees may choose to uphold the contract and only seek compensation for the other party's breach of contract. This applies to situations where the quick-recruiting company provides certain services or products, but the quality and quantity seriously deviate from the contractual agreement. The franchisee may, in accordance with Article 577 of the Civil Code, require the breaching party to bear the liability for breach of contract, including continued performance and compensation for losses. In quick-recruiting scams, continued performance is usually meaningless (as franchisees are often unable to continue operations), so compensation for losses is the primary remedy. When calculating losses, the following parts are included: (1) Losses of payments made: franchise fees, deposits, brand usage fees, and payments for equipment and raw materials purchased from headquarters. These should be fully refunded because the franchisee did not obtain the expected benefits under the contract. (2) Loss of investment costs: expenses incurred for the franchise project, such as shop decoration fees, rent, and personnel recruitment and training fees. If it can be proven that these investments were wasted due to the other party's breach of contract, compensation can also be claimed. (3) Business losses: actual losses incurred during the operation of the franchise store. If it can be proven that the losses resulted from the other party providing substandard products or false advertising leading to business failure, compensation for a certain amount of business losses can be claimed. However, in practice, courts are relatively cautious in supporting business losses (such as loss of expected profits), requiring sufficient evidence to prove the causal relationship between the losses and the other party's breach of contract, and that the amount of loss is reasonably foreseeable. Of course, it is still more feasible to claim compensation for actual losses based on contract law principles. If the other party's false advertising constitutes fraud, the franchisee can rescind the contract and also claim compensation for the resulting losses (this compensation can be the loss of the consequences of contract performance, or it can include losses incurred at the time of contracting due to reliance). In short, under the path of breach of contract compensation, franchisees should try to comprehensively list all losses and submit supporting evidence, and the court will comprehensively determine the scope of compensation.

Quick-recruiting scams are often accompanied by various administrative violations. Franchisees can actively report to relevant regulatory authorities to promote administrative intervention. On the one hand, they can report illegal franchise operations to the competent commercial authorities. The "Regulations on the Management of Commercial Franchising" clearly require franchisors to meet the conditions of "2 stores and 1 year" and fulfill the obligations of filing and information disclosure. If a quick-recruiting company does not have the qualifications and engages in franchising without authorization, violating Articles 7 and 8 of the Regulations, the commercial authorities have the right to order corrections, confiscate illegal gains, and impose a fine of more than 100,000 yuan and less than 500,000 yuan, and make an announcement. Article 24 of the Regulations stipulates that if a franchisor engages in franchise operations without the prescribed conditions, the competent commercial authority shall order corrections, confiscate illegal gains, and impose a fine of more than 100,000 yuan and less than 500,000 yuan. It can be seen that the intervention of the commercial authorities can, to a certain extent, recover the illegal gains of quick-recruiting companies and impose economic penalties. After the franchisee reports, if the commercial authorities investigate and determine that it is true, they may also order the franchisee to return franchise fees, rectify illegal activities, etc., putting pressure on them from an administrative perspective.

On the other hand, they can report false advertising and illegal advertising activities to the market supervision and administration department. Article 55 of the "Advertising Law" stipulates that advertisers who publish false advertisements shall be ordered by the market supervision department to stop publishing, eliminate the impact, and be fined 3 to 5 times the advertising fee (if the fee cannot be calculated, a fine of more than 200,000 yuan and less than 1 million yuan shall be imposed); in serious cases, the business license may be revoked. The exaggerated and untrue publicity, fabricated honors and data of quick-recruiting companies all constitute typical false advertising. According to Article 27 of the "Regulations on the Management of Commercial Franchising," if a franchisor uses advertising to engage in deceptive or misleading behavior, the industrial and commercial administrative department shall impose penalties in accordance with the Advertising Law. After the franchisee reports, if the market supervision department verifies that its publicity is illegal, it can impose a huge fine on it and order it to suspend operations for rectification. Although this administrative penalty does not directly compensate the franchisee's losses, it often can deter and punish offenders. In practice, some reported companies may take the initiative to propose reconciliation with the franchisee and return some funds in order to reduce penalties or calm the situation. Therefore, timely administrative reporting is one of the cards in the hands of franchisees.

In addition, if the quick-recruiting scam involves other illegal activities, such as operating without a license (operating a franchise without obtaining a food business license in accordance with the law), suspected pyramid schemes (collecting entry fees and recruiting subordinates to develop downlines), etc., franchisees can also report to the relevant competent authorities. Article 29 of the Regulations stipulates that if someone defrauds others of their property under the guise of franchising and does not constitute a crime, the public security organs shall handle it in accordance with the "Public Security Administration Punishment Law"; if someone engages in pyramid schemes under the guise of franchising, they shall be punished in accordance with the "Regulations on Prohibiting Pyramid Schemes." Therefore, even if the criminal filing standard has not yet been reached, the public security organs can impose public security penalties (such as administrative detention and fines) on quick-recruiting scams, which also has a positive significance in curbing the offender from continuing to defraud and promoting the return of funds.

When a quick-recruiting scam involves a huge amount of money, numerous victims, and the operator has a clear intention of illegal possession, franchisees should consider taking the criminal route to protect their own rights and interests. China's "Criminal Law" has clear provisions on fraud committed in the form of contracts, and the typical crime is contract fraud (Article 224 of the Criminal Law). Its elements include: for the purpose of illegal possession, defrauding the other party of their property during the process of signing and performing a contract, and if the amount is relatively large, it constitutes a crime. Quick-recruiting scams use the signing of franchise contracts as a pretense to collect a large amount of franchise fees and then breach the contract to defraud money, fully meeting the constituent elements of contract fraud. In fact, in recent years, many catering franchise scams have been investigated and prosecuted by public security organs as fraud cases. For example, in June 2023, the Nanjing Intermediate People's Court tried the first "quick-recruiting franchise" contract fraud case in Jiangsu Province. A franchise gang defrauded more than 300 franchisees of more than 50 million yuan in franchise fees in 3 months. The court sentenced four defendants to fixed-term imprisonment ranging from 5 to 12 years for contract fraud, and imposed fines ranging from 200,000 to 2 million yuan. Another example is the "Wan Yu Group" case in Shanghai, where a criminal group fabricated more than 20 catering brands and defrauded more than 5,800 victims of more than 440 million yuan nationwide. 69 people were arrested. After trial by the Shanghai Songjiang District Court, seven main offenders were sentenced to heavy sentences ranging from 5 to 14 years and 6 months for contract fraud, and fined 50,000 to 500,000 yuan. The deterrence and punishment of criminal accountability are obviously far greater than civil means.

Therefore, if franchisees find that they have been defrauded and the case is large-scale and there are many similar victims, they should promptly report to the public security organs and provide relevant evidence and clues to promote criminal investigation. Once the public security organs initiate an investigation, investigative measures (such as checking bank statements and searching and seizing assets) will help to fix evidence, clarify the flow of funds, and may seize property transferred and hidden by the fraud gang. For those that meet the standards for criminal filing, the procuratorial organs will ultimately file a public prosecution and pursue the criminal responsibility of the criminals. In criminal cases, victimized franchisees can file a civil lawsuit attached to a criminal case as victims, requesting the court to order the defendant to repay losses at the same time as sentencing. The first paragraph of Article 29 of the "Regulations on the Management of Commercial Franchising" also explicitly stipulates that if someone defrauds property under the guise of franchising and constitutes a crime, criminal responsibility shall be pursued in accordance with the law. It can be seen that the law has a strict sanction mechanism for such behavior.

It should be noted that in practice, the threshold for filing a criminal case is relatively high. The public security organs may initially refuse to file a case on the grounds of an "economic dispute," especially when only a few franchisees have filed a report and the amount involved is small. In this case, franchisees can consider jointly filing a report with other victims, submitting clues and materials showing a large number of victims and a huge amount of money involved, so that law enforcement agencies can recognize the seriousness of the case and its fraudulent nature. If the public security organs still refuse to file a case, the victims also have the right to request the procuratorial organs to supervise the filing of a case. As in the aforementioned Shanghai Wanyu Group case, a victim, Zheng Mou, whose report was not accepted by the public security organs, appealed to the procuratorate. After investigation, the procuratorate determined that the case was "a contract dispute on the surface, but actually contract fraud," and thus urged the public security organs to investigate the case, ultimately bringing the large fraud gang to justice. This case shows that supervision by the procuratorial organs can correct the improper refusal to file a case by individual public security organs and ensure that the case enters criminal proceedings.

The advantage of criminal proceedings is that the punishment and deterrence of criminals are the most direct and effective. However, its limitation is that the recovery of economic losses for the victims is not necessarily ideal: if the proceeds of the fraud have been squandered or hidden, even if the court orders compensation, the amount that can be executed may be limited. However, during the criminal investigation stage, if the stolen money and goods are seized, the court will explain in the judgment how to return them to the victims. In addition, when criminals face the pressure of heavy punishment, they are sometimes willing to voluntarily return stolen goods and compensate for losses in order to seek leniency. Therefore, franchisees should promptly provide payment vouchers, transfer records, etc., to the public security organs after filing a report to assist in tracing the whereabouts of the funds, so as to increase the possibility of future compensation.

In summary, whether it is the civil remedies of rescinding the contract or breach of contract lawsuit, or administrative reporting or criminal reporting, these are all options for franchisees to protect their rights, each with its own emphasis and can proceed in parallel without conflict. In practice, franchisees should comprehensively use these methods according to the specific circumstances: for example, first freeze the assets of the other party through civil preservation measures, and then promote the public security organs to intervene in the investigation; or while pursuing criminal liability, apply for civil execution based on the criminal judgment after it takes effect, etc. It needs to be emphasized that the initiation of civil lawsuits and criminal cases does not conflict, but once criminal proceedings are initiated, civil compensation lawsuits will often be suspended pending the outcome of the criminal case. Therefore, if a criminal case has already been filed, franchisees can use a criminal case with an attached civil lawsuit to comprehensively resolve the compensation issue. Conversely, if a criminal case has not yet been filed or the investigation has been delayed for a long time, civil proceedings can be initiated first to obtain property preservation and a favorable judgment. A multi-pronged strategy can improve the success rate of rights protection.

In the case of fast-recruiting franchise scams, franchisees should consider the means and strategies for protecting their rights, being good at collecting evidence, identifying the subject, and ensuring enforcement. The following are some important ideas and experiences in practice:

Evidence is the core element of the success or failure of rights protection. After discovering that they have been defrauded, franchisees should immediately preserve and fix all relevant evidence. This includes: the initial recruitment advertisements seen (screenshots of web pages, WeChat official account push messages, etc.), brochures, recruitment manuals, contract texts and attachments, payment vouchers (bank transfer records, receipts and invoices), and communication evidence such as emails and WeChat chat records between the two parties. If the franchisee has conducted an on-site investigation, they can recall and record the situation at that time, and it is best to obtain on-site photos, audio and video recordings (for example, videos of store inspections, which can prove that the queues on site were shills, etc.). If possible, evidence of the other party's false advertising can be collected, such as discovering that their authorized plaques are forged, celebrity endorsements are unauthorized, etc. These can serve as strong evidence to prove the other party's fraud. In addition, attention should be paid to the investigation conclusions of government departments: if the commerce or market supervision departments have investigated and dealt with the company due to reports from other franchisees, the penalty decisions and inspection notices issued should be collected in time as important evidence to support one's own claims. These may determine that the other party has engaged in illegal activities (such as operating without registration, providing false information), which can be cited in civil lawsuits. In criminal cases, franchisees should promptly communicate with the investigating organs, submit a loss list and supporting materials, and ensure that the criminal facts and the amount of losses are fully determined.

Fast-recruiting scams often involve multiple related companies and individuals. Franchisees need to see through the complex appearances and determine the subject that should be sued or held accountable. First, the counterparty of the franchise contract (legal person company) should be the direct defendant. On this basis, investigate its shareholder and executive information, and whether there is a parent company, related recruitment company, etc. In many cases, the recruitment process is operated by a third-party intermediary company, while the franchise contract is signed between the brand company and the franchisee. For this division of labor model, franchisees can consider including the recruitment intermediary company as a co-defendant: the legal basis is that it participated in the implementation of the fraudulent behavior, infringed on the property rights of the franchisee, and can be held jointly and severally liable for compensation with the brand company based on the theory of tort liability. For example, Article 1165 of the Civil Code stipulates the joint and several liability for joint tortfeasors. If the recruitment company, knowing that the brand party is committing fraud, still assists in soliciting franchisees, it constitutes joint tortfeasors with the brand party. Furthermore, the pursuit of personal liability cannot be ignored. If the evidence shows that certain company executives directly implemented the fraud (such as signing contracts and collecting funds in their personal names), franchisees can include them as co-defendants in civil lawsuits and claim that they bear joint and several liability for the company's debts. This is called "piercing the corporate veil" in the field of company law. According to Article 20 of the Company Law, if shareholders abuse the independent status of the company to evade debts, they shall bear joint and several liability for the company's debts. Although the application is strict in practice, for those one-person companies or obviously shell companies that defraud funds and then transfer them, franchisees can try this, adding a potential source of compensation.

Franchise contracts often stipulate the jurisdiction of disputes in the standard clauses, usually the location of the brand company. The jurisdiction clauses and dispute resolution methods in the contract should be reviewed first to determine the litigation or arbitration plan. In addition, if many victims are involved, the possibility of a class action lawsuit can be explored: for example, several franchisees sue the same defendant as co-plaintiffs in the same court. This requires that the facts and circumstances and the claims are homogeneous, which is conducive to the court's consolidation of the trial and improves efficiency. If franchisees in different places file lawsuits separately, the same defendant faces multiple lawsuits in different courts. Franchisees can also strengthen their contacts, exchange evidence, and share winning judgments to form a united force. In criminal cases, the public security organs should be urged to consolidate the cases filed separately as much as possible, and strive for a unified investigation by one organ to clarify the overall case.

Because fast-recruiting companies often have a habitual tendency to transfer assets and evade execution, precautionary measures should be taken in advance to preserve assets. When filing a civil lawsuit, an application for asset preservation can be made in accordance with the relevant provisions of the Civil Procedure Law, requesting the court to seize and freeze the defendant's bank accounts, real estate, vehicles, and other assets. The preservation application should be submitted as early as possible (it can be submitted at the same time as the lawsuit or even before the lawsuit) to avoid the defendant transferring funds. In particular, if the main account information of the defendant's receipt is known, freezing the account balance is an important measure to ensure that the judgment can be enforced in the future. In the Suzhou Mai Moude case, there is evidence showing that the fraudulent company transferred most of the franchise fees to personal accounts. If the franchisee can apply to freeze the relevant personal accounts based on this, it will greatly increase the opportunity for future recovery. For the person in charge who has absconded, if there is property such as real estate or luxury cars under his name that can be executed, it should also be seized in time.

In some cases, civil and criminal procedures may proceed concurrently. At this time, franchisees need to weigh the pros and cons and respond flexibly. If the public security organs have already filed an investigation and seized some property, the franchisee can actively participate in the criminal proceedings as a victim. If the criminal prosecution has not yet been initiated, and the other party still has some controllable property, the civil route can be prioritized to quickly preserve the property. Sometimes, under the pressure of civil litigation or criminal reporting, the other party may propose a private settlement or refund. Franchisees need to carefully evaluate the feasibility and fulfillment guarantee of the settlement plan, ensuring that they actually receive the compensation before considering withdrawing the lawsuit or showing leniency. If the other party is just using delaying tactics, the franchisee should firmly advance the legal process and not be easily induced.