Showing posts with label Franchising. Show all posts
Showing posts with label Franchising. Show all posts

Thursday, March 21, 2013

Multi-Level Marketing or Franchising?

We are in the age where everyone is practically looking for a business opportunity that will give him or her extra income. But what will you choose? Multi-level marketing or franchising? 

Here are some facts that will help you choose between franchising or multi-level marketing. 

Franchising has been defined as a commercial relationship that is composed of three influential factors and these factors are the use of marketing plan, trademark and franchisee fee. 

A franchisee or the buyer is allowed to use the trademark of a popular brand with a franchise fee. 

Franchisee fee is not a one time payment, as a franchisee you have to pay the franchise fee every year as long as you are using the marketing plan and trademark of the brand. 

Aside from the franchisee fee, you also have to pay royalty fee. Royalty fee is a percentage of your earnings in relation to the sale that you have incurred while marketing the brand. 

The royalty fee and the franchise fee do not include the products that you have to sell. For example, you are franchising a food chain, the franchise fee and royalty fee does not include the burgers, fries, juices that you will sell in your burger shop. 

You have to buy the products direct from the franchising company and you have to remember that you are not allowed to buy any product outside the franchise company. 

On the other hand, multi-level marketing is a business opportunity that gives huge income even without paying royalty fee and franchisee fee. 

Meaning, in multi-level marketing, you do not have to pay millions of franchising fee or royalty fee. You can already be a member of multi-level marketing with just a small membership fee. 

In addition, the membership fee in multi-level marketing is just a one time payment unlike the royalty fee that you have to pay yearly so not to loose the right to market the brand. 

But if the business is not good, where will you get the payment for franchising fee and royalty fee? This is the reason why most franchisee investments are not long lasting because you have to pay millions of money for franchisee fee and royalty fee without an assurance that it will give high returns.
 
In addition, why choose to market products that will require you to pay them half of your earnings where in fact there are other business opportunities that will give the freedom to own and manage your own business investment? 

As a whole, multi-level marketing is a better alternative than franchising because the terms of multi-level marketing is more practical, economical and gives higher returns of investment than a franchising. 

Bio – Terry is a free lancer writer of www.smallbusinessmoney.org/ and he enjoys writing about business for home topics.


Saturday, July 21, 2012

How to Choose a Franchise Opportunity

What's in the bag? Business of Software 2010(Photo credit: betsyweber)Starting a business from scratch sometimes can prove to be very difficult. You may be new to the business world and you may not have a clue where to start. Many people skip the whole process and look for a franchise to buy into. They feel that the extra hand holding and developed ideas can be a short cut to success. Jumping on the already established business model of an existing chain will get them where they want to be in a shorter period of time. 

When starting a new business from scratch or going the Franchises route the steps are some what similar.

1. There are many different franchise opportunities and with each there are different criteria and financial requirements. You need to pick a franchise that you can afford. Be sure to obtain a complete list of all franchise fees, taxes, licenses, payroll and employee benefits, for at least one year. Either have all necessary cash or financing ready to pay expenses for the first year because when becoming established, you may not make much income to pay all expense. Having a budget for the first year and seeking financial and accounting help in advance will help guarantee success.

2. Pick a franchise that matches your likes and goals. The first years will be difficult, having a franchise business that you enjoy will help you get through the tough times. When you are in a franchise that you do not particularly like but pick for the financial reward and it starts to have problems you may not be so motivated to see the process through.

3. Have marketing research done before putting any money down on a franchise. See if the area will support the business you are starting. Do you have the population and need for the franchise you are starting. Does the franchise have an appeal and provide something needed in the area? 

4. Visit other franchises owners. Talk to people who have already taken the steps you are about to take. Ask them about any possible problems that may come up. Ask them about the mistakes they made and what they learned from them. Even if you have to travel, this one tip is the most important because the people you talk to will help you make the final decision in pursuing this franchise business. Making this connection sets up a future friend/contact that you may later need for help or advice.

5. Review nationwide ratings on the franchise. The International Franchise Association is a trusted site for quality ratings on all franchise opportunities. Get as much information as possible about the franchiser's history, number of franchisees, support provided and the skills needed to run your franchise business using the franchiser's tools and training.

6. Compare different franchises in the business you would like to go in. Compare start up costs, expense and income information from more than one franchise in the niche you want to pursue. Check for different contingency's in the franchise disclosure documents. Find out what the procedures are for the different problems or circumstances the business may face.

Overall, go slow in the purchase of the franchise. Take all the time you need for full disclosure and planning.

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