Know the Significant Differences Between a Franchise and a Business Opportunity
Franchising Or Business Opportunities
I’m researching business opportunities as a new career option. Obviously there are a lot to choose from and I’m finding it very confusing. Can you offer some advice on how to get some clarity and direction? I’d also like to know if there’s a difference between a franchise vs. business opportunity. I might be wrong, but each type advertised differently. Thanks.
First, Know The Key Difference Of Franchise Vs. Business Opportunity
Yours is an excellent, sense question, so it’s good that you asked. More specifically for those wanting to switch careers and perhaps own a business. I make the distinction between ‘changing careers’ and becoming self-employed as opposed to people who are driven to independent entrepreneurship. The essence of the difference in motivation is usually very different. So, here you go.
Let’s Start With Franchising
First, it’s an industry unto itself as opposed to an entity legally defined as a business opportunity. Here are some salient features for you to study. Obviously this is a miniscule list, just a starting point.
- It’s highly regulated by the FTC (Federal Trade Commission), as well as by numerous states
- You’ll pay and upfront franchise fee, ongoing royalties, for the term, and other fees
- You would (hopefully) receive excellent training, set-up and support
- Included will be a territory and use of the name for a specified period of time
- There are complex information/documents that will be foreign to you
- Get professional guidance from a franchise attorney to review the documents
The Essence Of A Business Opportunity
This is a very different animal although there some similarities. Again, this is a starting point and your study is required.
- Not nearly as regulated as franchising – though many states have business opportunity laws
- You’ll pay an upfront fee for training, but basically be own your own after setting up
- There may or may not be a defined territory or operational area
- You may have to buy materials from the seller as opposed to being
- You will have fewer materials to review so your due diligence might be more demanding
Now, About Your Choice Of A Franchise Vs. Business Opportunity?
When it comes to business opportunities and you in particular, the drive to self-employment could be perceived more as a job search than a chance at a truly life changing event. Let me be a little more clear on that point. Because self-employment is much more a personal and emotional commitment than a job, it is critically important to be in love with the venture.
Here’s our take on the subject. Don’t get caught up with websites and publications advertising business opportunities for sale. Instead, get totally caught up with yourself. Business ownership should primarily be about YOU, what YOU want to do. Of course there must be a commercial value to the venture, meaning that there must be customers or clients in need of your product or service. Having the financial wherewithal to enter the business in the first place is a factor, but in most cases it should not be a deal breaker. Example: You might about bootstrapping a businesses. Here’s a case in point.
The bottom line of franchise vs. business opportunity first, knowing there’s a difference, and deciding if you want to be more or less dependent upon the teacher, the opportunity seller.
And last, here’s our best effort at helping folks just like you eliminate confusion and gain clarity, The Focus Program for Emerging Entrepreneurs.