Joel Libava
In this post, I’m going to tell you what you need to know about Business Opportunities vs. Franchise Opportunities. Do you really know the difference?
The reason I ask, is that a couple of years ago I got in a little online tiff with a gentleman who was calling his business opportunity a “franchise.” It wasn’t. As a matter of fact, it wasn’t even in the same family as a franchise business.
In view of that, I told him that if he didn’t stop offering his little “biz-opp” as a “franchise opportunity” that I would turn him into the Federal Trade Commission (FTC) I wasn’t kidding. When it comes to stuff like this, I don’t play.
As a matter of fact, that kind of stuff really gets me going. I mean it realllly gets me going. I cannot stand scams. I hate (yes hate) people who try to take advantage of others by using words that totally misrepresent what it is they’re doing. Or in this case, what they’re selling.
With that said, I don’t remember the name of the company, but there are two distinct things about it that I do remember;
1. The total investment was around $500.
2. The product that was being peddled was a “wellness product.” (Vitamins)
Now, just in case you don’t know, this “franchise” was nothing more than your typical MLM garbage. You know, multi-level-marketing…network marketing…whatever it’s being called nowadays.
On Network Marketing
How many different ways will these “network marketers” try to get me to sign on with their crap products?
I know I’m in trouble when I answer my phone, and there’s a “friend” that I haven’t heard from for 7 years on the other end of the line. For example:
Friend : “Joel Libava! How the heck are you? I haven’t seen you in like forever!”
Me: “I’m good, what’s happening?“
Friend: “Well, the reason I’m calling is to find out if you’d be interested in making some extra money…you know, in your own business?”
Me: “Well, I have my own business already…“
Friend: “Great!!!!!!!!! Well, you can do this part-time. Can you meet me for coffee tomorrow, so I can show you what it is? I’m really excited about it…“
Yada. Yada. Yada…
Back to the phone call.
Me: “So, what is this great thing?
Friend: “Well, I really need to show it to you in person.“
Me: “Is it Multi-Level Marketing?”
Friend: “No…It’s not MLM. It’s a kind of direct marketing. You know, Network Marketing…“
Me: Click.
Franchise vs Business Opportunity: Those Sneaky-Ass Little Pukes
Fact: there are some sneaky little pukes who are using the word “franchise” in their flimsy, but colorful, brochures.
They Are Not Franchise Businesses. There Is No Franchise System!
They’re MLM businesses. And for around 1% of the folks who have these “businesses”, they are money-makers. But the sellers don’t have a lot of rules they must follow.
On the other hand, people who sell Business Opportunities do have some rules…some actual rules they must follow. It’s just that Business Opportunities are not held to account as much as a franchise business opportunity is.
That’s not to say that a business opportunity is bad; it’s just that they’re usually not as tight, system-wise as a genuine franchise business opportunity….
Plus, as I mentioned above, there are certain rules that those selling business opportunities must follow. There are also certain rules that those selling franchises must abide by, too.
FYI: A wonderful example of a business like this is the Amazon franchise, which is not a franchise at all. Note; Amazon isn’t calling their “opportunity” a franchise, but others are.
Business Opportunities vs Franchise Opportunities
When I do seminars on franchise ownership, I always tell the attendees that one way to tell if an “opportunity” is a franchise or not, is to look at the start-up costs involved. Please allow me to be blunt, here.
If the total up-front investment is $485, it’s not a franchise offering.
In other words, anyone that tries to sell you a “franchise” for a few hundred dollars, is someone that you shouldn’t do business with. Ever.
That’s because a franchise business, at a minimum, will cost you at least $50,000. Usually more. But why?
Because you get a lot of things when you buy a franchise business. Like:
- Formal training
- Support (On site and off site)
- Purchasing power
- A marketing plan
- Software and technology
- Real Estate assistance
And those are just some of the things you’ll get as a franchise owner. There’s more to a franchise sytsem.
Business Opportunities
Business opportunities usually provide the minimum needed to help you launch your business. The support that comes from a business opportunity is not usually ongoing, unless you’re willing to pay for it. (Most biz-opp sellers will tell you that you’ll get support, but they don’t have to do it. It’s not part of the legal agreement.)
However, a franchise contract, although wordy, and complicated, does state what the franchisor must do, support wise.
That said, I have worked with a few business opportunities in the past. And I still do, occasionally. But they need to be legit.
One business opportunity was an equipment leasing company. Fail. One business opportunity was a sign business. Not bad. But the other ones were so bland…and so weak, I don’t remember what they were.
My point is this:
If you’re going to become your own boss, make sure you know exactly what business and business-type you’re getting into. In other words, you need to become an educated franchise buyer.
And make sure you understand the difference between a Franchises and Business Opportunities.
About the Author
The Franchise King®, Joel Libava, is a leading franchise expert, author of "Become a Franchise Owner!" and "The Definitive Guide to Franchise Research." Featured in outlets like The New York Times, CNBC, and Franchise Direct, Joel’s no-nonsense approach as a trusted Franchise Ownership Advisor helps aspiring franchisees make smart, informed decisions in their journey to franchise ownership. He owns and operates this franchise blog.
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