Not all business opportunities are franchises.
Similar to a franchise, a business opportunity is the sale of a system the licenser has cultivated and is confident it will be profitable when replicated. Traditionally, with the purchase of a business opportunity, the buyer owns the business outright and, in many cases, can customize the business to his or her tastes.
With a business opportunity, once the purchase is completed, and training (if applicable) is completed, the relationship is usually over — exceptions apply. Because they usually don’t come with the more comprehenisive support franchises typically offer, business opportunities tend to cost less than franchises.
Business opportunities cover a broad spectrum of careers and include the following:
- Turnkey operations
- Distributorships
- Dealerships
- Network/multi-level marketing
- Trademark/product licensees
- Rack jobbers
- Vending
How a Franchise Differs From a Typical Business Opportunity
Yes, a franchise is a type of business opportunity. But it can be considered the next level of business opportunity. One that comes with all the bells and whistles.
For franchisees, the benefits lay in the partnership. In franchising, franchisees gain access to the franchisor’s know-how and experience for its business system in exchange for their monetary investment and personal labor.
When you buy into a franchise, you're buying into an operational business concept, with processes clearly mapped out in that company's operations manual. Most franchisors also provide comprehensive training in how to operate the business and give clear instructions on how to use all the visible trappings such as trademarks, logos, uniforms, furnishings etc. The operations manual spells out all these details.
Via the operations manual and training, franchisees who want to own a business can shorten the learning curve time that comes with starting a business. It’s also a way for franchisees to avoid spending a significant portion of the money that typically comes along with developing a business idea.
In addition, a franchise agreement is not a one-and-done thing. For the duration of the franchise agreement, franchisees retain the rights to operate a proven brand in a designated territory. They also enjoy ongoing support from the parent company foe virtually all areas of the business.
On the other side of the deal, by licensing out its business methods and pledging support to franchisees, the franchisor allows itself the opportunity to expand into areas it may have had difficulty expanding to without the extra money and manpower.
Picking the Right One for You
Figuring out which kind of entrepreneurial venture is right for your personal needs and goals is an important part of the research process that should precede other decisions.
Both of these approaches to business investment are suitable for those who don’t have a unique product or service to bring to the marketplace but still want to own a business.
The greatest distinguishing factor between the two is how much support you want.
If you’re simply looking for a jumpstart and desire more flexibility, a business opportunity is probably the route for you. However, if you’re looking for more consistent support and can handle more restrictions (or desire more guidance) in the procedures of your business, a franchise might be the path for you.
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