Franchising vs. Network Marketing

Difference between Network Marketing and Franchising? The concepts are actually very similar and I have compared them many times in my day, specifically to individuals who seemed to be a little ignorant towards MLM. But after further review, and an experience in my home based business with a franchise owner I am even more inclined to believe the right MLM is better than starting a franchise all together, especially in this economy.

How are they similar? Well let’s compare them briefly. Imagine being the first Starbucks in your state, as a smart business man (if you had the choice) would you rather sell as much coffee out of your business, or open hundreds of Starbucks across the state or even country and take a percentages off them? Open franchises is the correct answer, Leverage yourself! Your income is not solely based on the business of one Starbucks; therefore leveraged income can be created as well as the time to enjoy it. Basic concept I know, now let us compare this to Network Marketing.

Imagine yourself as an independent distributor for a network marketing company of your choice.  You buy product monthly, you can either sell your product person to person, or find other independent distributors throughout the city, state, country even world.  Take a percentage off every distributor in your business and create a residual income, or leveraged income that not only creates income, but creates time as well. Similarities are very apparent I know.

Another major similar concept is that of DUPLICATION. The only way to create residual income is to have a simple but effective way of doing something that thousands can do over and over again. That is why when you open a McDonalds you must be approved and trained in an actual school. If the system is not followed there is a good chance you will fail and give the company a bad name.

In a Network Marketing business the same of idea DUPLICATION is apparent. You must have a simple yet effective way to present the opportunity so that thousands can do it over and over again.

Similarities

-          Investment

-          Reorder Investment

-          Simple Duplicated System

-          Creation of  Multiple Successful Duplicated Businesses

-          Leveraged income

Now let’s focus on how they are different. Well let’s be completely honest the public conception of one over the other is apparent. There are many reasons for this, and some could be justifiable. Uncle Bobby does not own a Dominoes Pizza, but he can own a network marketing opportunity, therefore the persona of this business can be dwindled if anyone can afford it. There is a public perception of business; the presumption given to business owners is that they’re smarter or better then an average person like Uncle Bobby.  This leads me into another huge difference which is capital needed to start this business venture. Franchises can range from $50,000 to $500,000 vs. network marketing who investments range for less $100 to maybe $2,000.

Overhead differences are obviously significant as well. Because network marketing does not need a building to operate you save thousands of dollars every month in heating and cooling, electricity, rent, repairs, employees, employee benefits, and Marketing/Advertising. This combined with the huge inventory, spreadsheets and paperwork that comes with a franchise; it is apparent why network marketing has an extreme value. Something to think about also is most franchises are not inheritable to person of your choice unlike a business built through network marketing.

The last difference is that of exponential growth. In my example I talked about you opening hundreds of franchises though out the state.  Now imagine giving every franchise the opportunity to build their own networks of Starbucks and you take a percentage of that as well.  You open 10 Starbucks, they open 10 you now have a 100, vs. you opening and training each business, as well is the fact that your franchises are creating the same opportunity that made you excited to begin with.

So why do so many people say Network Marketing doesn’t work, but  will never say that opening a McDonalds franchise wont?  This is simple, because the difference in capital investment is so large between these industries there will also be discrepancies in people. When it comes to training, Desire, discipline, ability to talk to others, this difference in investment will defiantly weed out the people that “want to give this opportunity a try”. I mean what do you got to lose a, few hundred? Imagine an individual putting $200k and “wanting to give it a try”, it just doesn’t happen. Remember Network Marketing is a business (30 billion in sales worldwide) so if not treated like a business and like a hobby it obvious that the success rate will dip.

Differences

-          Investment Capital

-          Over Head

-          Headache

-          Process to get involved

-          Seclusion of the opportunity

-          Exponential growth

In conclusion I will end this with a brief story about someone in the business in Dallas. When presented with this opportunity at first was skeptical as most are, but because of his professionalism took some time to research. His conclusion was it was time for a change, even though he was a multi-millionaire, he was running over 20 franchises and there just wasn’t the time available for his family that he wanted. He seen that recession is the best time to get involved in Network Marketing and presented information I wasn’t even aware of. There have been 5 recessions the last 4 years, every network marketing company that hit a billion in sales happened during the ending stages of a recession.  He decided to put his efforts part time into building an asset through MLM while still running his franchises and hit Diamond and is car qualified in a matter of 3 months. An absolutely amazing feat, but well worth soon he will be able to replace his fulltime venture with this part time one.

Tags: Business, Franchising, Home Based Business, Investment, McDonalds, mlm, Network Marketing, Starbucks