Franchise or Business Opportunity?
What is the difference between a franchise and a business opportunity?
Business opportunities are less structured than franchises, so the definition of what constitutes a business opportunity isn’t easy to pin down. In essence, a business opportunity is any package of goods or services that enables the purchaser to begin a business and in which the seller represents that it will provide a marketing or sales plan, that a market exists for the product or service, and that the venture will be profitable.
Other key factors:
- A business opportunity doesn’t generally feature the seller’s trademark; buyers operate under his or her own name.
- Business opportunities tend to be less expensive than franchises and generally don’t charge ongoing royalty fees.
- Business opportunities allow buyers to proceed with no restrictions as to geographic market and operations.
- Most business opportunity ventures have no continuing supportive relationship between the seller and the buyer; after the initial package is sold, buyers are on their own.
The Pros of a Franchise
The greatest strength of franchising is its ability to bring independent retailers together using a single trademark and business concept. For the individual owner, there are several advantages to franchising. The ever-present risk of business failure is reduced when the business program has already proved to be successful in the marketplace; the use of an established trademark saves the business owner the cost of creating and advertising a name that customers will recognize; and the advantages of group advertising and purchasing make operations more profitable. In addition, ongoing training creates an instant operational expertise that would otherwise need to be acquired through trial and error. Also, with franchising, expansion seems to come more naturally. Operating a successful franchise may quickly lead to building a second and then a third business, and so on. Fortunes have been built this way.
- The Benefits
- Brand awareness
- Uniformity in meeting customer expectations
- Reduction of risk
- Turnkey operation
- Standardized products and systems
- Standardized financial and accounting systems
- The efficiencies of group purchasing
- Supervision and consulting readily available
- The power of pooled advertising
- National and local advertising programs
- Point-of-sale advertising
- Uniform packaging
- Ongoing research and development
- Financial assistance
- Site selection guidance
- Operations manual provided
- Sales and marketing assistance