Franchise Versus Network Marketing Business Opportunity: Which Is Right For You?

Franchise versus Network Marketing Business Opportunity: Which is Right for You?

There are stories of successes and failures with both franchises and network marketing businesses. Take a look at the similarities and differences of each opportunity to determine the right one for your situation.

As you are trying to determine the right business opportunity for you to consider, it makes sense to compare and contrast the network marketing business opportunity to purchasing a franchise. There are great success stories in both categories, as well as stories of monumental failure and financial loss. A careful analysis and comparison will help you to understand the risks and costs involved, so that you can move forward with the opportunity that is right for your unique situation and financial goals.

Understanding a Franchise Opportunity

There are thousands of franchise opportunities available for purchase. From the high end, pricey, well-known franchises like Starbucks, McDonalds or Chick-Fil-A to more affordable and obscure companies that provide products and services for specific niches, you will have a wide selection of franchises from which to choose.

The great thing about a franchise is that there is a business model that has been tested and approved and is ready for you to implement. Typically, once you buy into a franchise opportunity you have access to training and tools designed to help you develop a solid foundation for your franchise business.

Understanding a Network Marketing Business Opportunity

With a little online research, you can uncover numerous network marketing opportunities. Also known as multi-level marketing or MLM, network marking businesses typically serve specific niches, such as selling vitamins, diet products, cosmetics, kitchen supplies or home dcor. But there are also MLM companies out there that have a wider-range of product offerings much like an online supermarket or health food store.

The network marketing business opportunity allows you to earn income from retail sales as well as through your recruits' retail sales. You receive a portion of what your downline sells. The training and networking is a huge part of the MLM business, because training your recruits well and nurturing the distributor relationships often translates into excellent financial returns.

Differences between Franchises and a Network Marketing Business Opportunity

Purchasing a franchise means you are buying into the business model as well as any trainings that come with the purchase. However, you will personally be responsible for delivering the product or service, hiring staff members, and maintaining the business records.

With network marketing you are buying into the business model, but someone else produces the product, stores it, and fulfills your customer orders as well as delivers it. So basically, your only job is to find customers and distributors. The typical headaches involved with a new business or franchise are eliminated, because you don't have to deal with hassles like payroll or human resources.

Another major difference between the two business models is the cost involved. With a franchise, your initial fees alone can run you thousands of dollars. Then, you have the start-up costs involved, such as real estate, equipment, and employees, not to mention the royalties you must pay to the franchisor, which is usually 4 to 8% of your gross sales. To top it all off, franchises reportedly don't even break-even until the business' second year.

A typical network marketing business opportunity may cost you from $100 to $1,000 for the business set-up fees, depending on the business. There may be monthly costs involved, but typically no more than $50 to $200 at the most. Because the initial cost is so low, you break even right away, and then move onto increasing your income with commissions ranging from 5 to 15%.

Clearly, the costs of taking on a network marketing business opportunity are much less than purchasing a franchise. Yet you still must decide what is best for your business interests and financial goals. Both opportunities show great potential for bringing in significant income, so it is up to you to determine your skill set and personality type, so you can determine the right opportunity for your unique needs.

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