Franchise vs Business Opportunities

There are two ways of making your way into the entrepreneur world. You could either buy a business opportunity or buy a franchise. Both of them are very similar in a few aspects. However, they have distinct differences that you must consider before you decide as to choose which path.

BUSINESS OPPORTUNITIES

Buying a business opportunity allows you to purchase a business which allows you to run it however you wish to sell or lease products of the business opportunity seller. This allows the owner to customize all aspects of the business according to their likings and requirements. There are a variety of business opportunity careers to choose from.

• Distributorships

Distribution of another company’s products to dealer. However, you cannot use the company’s name as your own.

• Turnkey Operations

Products or services ready to be sold to the consumers after being purchased.

• Dealers

The dealer purchase products from distributors and supply the product to retail and consumers.

• Network Marketing

It is commission based job. An agent sells the product to the customers and is given commission according to the sales.

• Trademark

Brand name, methods, products and technology are granted by a license by the company.

• Vending Machines

An agent pays for the machine and product and sell it to customers

• Rack Jobbers

An agent is responsible for stocking product inventory provided by the company in store racks. The income is commission based.

• Work from Home

Working from home is for candidates who work remotely using a computer.

FRANCHISES

If you buy a franchise you are granted a license by a franchisor company which allows you to sell its product or services in a specified territory. The franchisee is required to sign a Franchise Agreement or Franchise Disclosure Document which includes all the obligations of the franchise as well as the franchisor. There are guidelines in place as to how a franchise is supposed to run the business in order to maintain consistency.

There are majorly 3 kinds of franchises:

• Business Format:

There are predetermined ways to run a franchise.

• Product:

Permission to sell or distribute a product under the brand name and logo is granted by the franchisor.

• Manufacturing:

The  franchisor allows the franchisee to manufacture the product and sell them under their brand name.

FRANCHISE VS BUSINESS OPPORTUNITY

 

	Business Opportunity	Franchise
Costs	Requires a few royalty payments. Less costly than buying franchise	High upfront cost. Regular royalties to be paid to the franchisor. In case of financial assistance taken from franchisor, recovery becomes steep
Structure	Less structured than franchise, allowing owners to customize the operations	The franchisor’s guidelines are to be followed. Very little or no scope allowed for deviation from the structure.
Ongoing Support	Mostly informal support. No obligations after the purchase of the business opportunity is done.	There is ongoing support of the franchisor for training, staff and development costs.
Legal Regulation	A license required for the purchase of the business opportunity. Varies from place to place.	A Franchise Agreement needs to be provided by the franchisor to close the deal.

RISKS

When it comes to being the owner of a business opportunity, one needs to be careful to avoid scams. Since, there are customizations in operation structures, the owner of business opportunity needs to personally do all the risk management. Buying a franchise has its own set of risks too. There is very little support to franchise from in FTC in case of an event. Also, all franchisees share a brand reputation. One wrong move of other franchisee or of the franchisor can hamper your business also.

CONCLUSION

Hoping that you have understood the difference between franchises and business opportunities, you can now make an informed decision as to what is the best choice for you. Both are very unique ways to bring an already established product in the marketplace. The question is, how much support do you want? Whatever you decide, it is advisable to consult professional advice. A lawyer and an accountant shall better help you understand the conditions and policies for both the methods and help you assess the amount of risk you can take. With a strong business plan  and lots of hard work you can be a successful entrepreneur.   Franchising Roots understand all your franchising needs. We are the leader in business development services in India. With the help of ours franchise experts, we help you pick the right franchise for you and your business plans. Contact us to know more about the franchising opportunities in India.