The Differences Between a Franchise & Business Opportunity
The Differences Between a Franchise & Business Opportunity
BUSINESS OPPORTUNITY:
All franchises are considered business opportunities, but not all business opportunities are franchises. A business opportunity involves the sale or lease of another's product or service that will enable the purchaser to establish a business. Other types of business opportunities besides franchises include:
- Turnkey operations - A product or service which can be provided or resold to another immediately after it is purchased. It is often considered the same as a franchise, but not all franchises are turnkeys.
- Distributorships - An independent agent that has entered into an agreement to market the product of another, but does not use the manufacturer's trade name as part of their name. Distributors may sell to several dealers. (For example, food service distributors that provide bulk items to restaurants, hotels, schools, hospitals, etc.)
- Dealer - Similar to distributorship but they sell only to consumers and retailers. (For example, auto dealerships)
- Vending Machine routes and Rack Jobbers - Two methods of marketing another company's products through distribution systems to various stores.
- Network Marketing or Multi-Level Marketing (MLM) - A business model that needs a distributor network to build the business. It involves selling products directly to consumers, as well as through a network of other agents whom you recruit. You usually earn commissions on both your sales as well as those of the other agents you recruit.
- Trademark/product licenses - The licensee may use the seller's trade name as well as certain of their methods, products, equipment, and technologies.
- Cooperatives - An existing business may affiliate with a larger network of similar businesses in order to advertise and market products and services, using a common identity.
Advantages:
- Typically the initial start-up costs are less than establishing a franchise. Upfront fees are lower and there usually are not ongoing royalties to pay to the seller.
- Business opportunities afford a proven system of operation and products and services.
- Financing is many times readily obtained through the leverage of the parent company.
- Comprehensive training programs are usually provided, making the learning curve much easier and shorter.
- Site selection is often chosen by experts at the parent company, usually providing the best location for marketing the products.
- Marketing and advertising are usually a joint effort between the opportunity provider and the purchaser. This can decrease dramatically promotional expense for the licensee.
- Purchasing power is a great advantage. The larger parent company can often get better deals by buying equipment and materials in bigger quantities.
Disadvantages:
- Since the purchaser usually does not pay any ongoing fees to the seller, there is typically no incentive for ongoing support to be provided. If the seller runs into problems, he/she is usually on his/her own.
- Exclusivity clauses can put limits on what a licensee is allowed to sell. If the entrepreneur deviates from the clause, the licensor can cancel the agreement.
- Even though sites are usually selected by experts within the parent companies, some poor choices can be made. It is important for the licensee to research the area themselves for marketability of the products/services being offered.
- If the parent-company would go bankrupt, there is the risk of the licensees losing their businesses as well, although the risk would be greater if it were a franchise.
Any type of business opportunity should be carefully researched and investigated before taking the plunge in order to minimize the risk. A potential entrepreneur must also carefully evaluate his/her personality traits and family situation to see what sort of business would best suit his/her needs.
The Differences Between a Franchise Business Opportunity - To learn more about this author, visit Don Daszkowski's Website.
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When considering life as an entrepreneur, it is important to understand the differences between a franchise, business opportunity and a start-up business. There are, of course, advantages and disadvantages to each style of business. In this article we will discuss the advantages and disadvantages of business opportunities and the difference between a franchise and business opportunity.
BUSINESS OPPORTUNITY:
All franchises are considered business opportunities, but not all business opportunities are franchises. A business opportunity involves the sale or lease of another's product or service that will enable the purchaser to establish a business. Other types of business opportunities besides franchises include:
- Turnkey operations - A product or service which can be provided or resold to another immediately after it is purchased. It is often considered the same as a franchise, but not all franchises are turnkeys.
- Distributorships - An independent agent that has entered into an agreement to market the product of another, but does not use the manufacturer's trade name as part of their name. Distributors may sell to several dealers. (For example, food service distributors that provide bulk items to restaurants, hotels, schools, hospitals, etc.)
- Dealer - Similar to distributorship but they sell only to consumers and retailers. (For example, auto dealerships)
- Vending Machine routes and Rack Jobbers - Two methods of marketing another company's products through distribution systems to various stores.
- Network Marketing or Multi-Level Marketing (MLM) - A business model that needs a distributor network to build the business. It involves selling products directly to consumers, as well as through a network of other agents whom you recruit. You usually earn commissions on both your sales as well as those of the other agents you recruit.
- Trademark/product licenses - The licensee may use the seller's trade name as well as certain of their methods, products, equipment, and technologies.
- Cooperatives - An existing business may affiliate with a larger network of similar businesses in order to advertise and market products and services, using a common identity.
Advantages:
- Typically the initial start-up costs are less than establishing a franchise. Upfront fees are lower and there usually are not ongoing royalties to pay to the seller.
- Business opportunities afford a proven system of operation and products and services.
- Financing is many times readily obtained through the leverage of the parent company.
- Comprehensive training programs are usually provided, making the learning curve much easier and shorter.
- Site selection is often chosen by experts at the parent company, usually providing the best location for marketing the products.
- Marketing and advertising are usually a joint effort between the opportunity provider and the purchaser. This can decrease dramatically promotional expense for the licensee.
- Purchasing power is a great advantage. The larger parent company can often get better deals by buying equipment and materials in bigger quantities.
Disadvantages:
- Since the purchaser usually does not pay any ongoing fees to the seller, there is typically no incentive for ongoing support to be provided. If the seller runs into problems, he/she is usually on his/her own.
- Exclusivity clauses can put limits on what a licensee is allowed to sell. If the entrepreneur deviates from the clause, the licensor can cancel the agreement.
- Even though sites are usually selected by experts within the parent companies, some poor choices can be made. It is important for the licensee to research the area themselves for marketability of the products/services being offered.
- If the parent-company would go bankrupt, there is the risk of the licensees losing their businesses as well, although the risk would be greater if it were a franchise.
Any type of business opportunity should be carefully researched and investigated before taking the plunge in order to minimize the risk. A potential entrepreneur must also carefully evaluate his/her personality traits and family situation to see what sort of business would best suit his/her needs.
The Differences Between a Franchise Business Opportunity - To learn more about this author, visit Don Daszkowski's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
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