Small Franchises or
MLM Home Based Businesses?
If you're looking at small franchises for starting a small business it's worth comparing them to MLM home based businesses. MLM, also known as multilevel marketing or network marketing is based on the same basic idea as a franchise opportunity. You buy the rights to sell branded products or services from an existing business as a distributor or franchisee.What are the main differences between small franchises and MLM home based businesses? And what do they have in common? COST
Buying a franchise is much more expensive than the entrance fee to become a network marketing distributor, even though the potential earnings in network marketing can match or exceed many franchises. At first glance, this low start up cost is a major advantage for starting any home based business. However, it does result in thousands of people paying to become MLM distributors and then giving up early on when they don't achieve success. On the other hand, franchisees have to pay thousands of dollars to get started. This usually means that they will have given more consideration to starting a small business, and also that they hang on in there when the going gets tough. EARNINGS STRUCTURE
With both small franchises and MLM home based businesses you earn money by selling to customers. However, you can also earn money from network marketing through sales made by new distributors you introduce to your company. In effect, you can build your own commission only sales team - and if that team is successful you can earn a lot of money. This type of residual income is a major attraction for many people who go for MLM. REPUTATION
Franchisees are usually seen as honest upstanding members of the local business community. However, network marketing is frowned on by many people, despite its increasing acceptance by many very well respected business and political leaders. Multilevel marketing is still associated with the illegal 'pyramind selling' where you get paid for getting a new person to join a company. That's different from MLM where you only get paid when your team makes sales to customers. In my view the biggest issue with network marketing is not the mistaken assumption that they are pyramid schemes. It is that many distributors tend to 'oversell the opportunity' in an attempt to sign up new distributors to their team. Strangely, some franchisors may also fall into the same trap when looking for new franchisees - but this does not seem to have affected the reputation of the franchise industry in the same way. SUPPORT & TRAINING
You should get good support and training from your franchise or network marketing company. It is in their best interest as you are, in effect, part of their sales team. Robert Kiyosaki recommends network marketing as a way to learn about running a business. Given the low start up cost, that may be a sound plan. CONTROL
With both small franchises and MLM home based businesses you will have to follow many company rules about various matters such as how you are permitted to advertise, when you can use the company name and so on. You can lose your whole business if you breach these rules. BUYING A TURNKEY BUSINESS
To some extent you are buying a turnkey business opportunity with both franchising and MLM. It is true that you don't have to think up a business idea, and also that marketing materials are made available to you. However, you still have to makes these businesses work. You will have to earn your success through hard work, persistence and commitment. For some people, buying a franchise is simply too expensive. However, if you want to build a successful home based business it's well worth looking into franchise and MLM opportunities so you get a better idea of what's on offer. This may even help you develop your thinking about your own small business ideas to start up from scratch.
BACK to TOP Small FranchisesRETURN to Home Based Franchises to Buy HOME to Successful Home Based Business
|
