Business Opportunities vs. Franchises: What's Right For You?

While browsing over the various franchise opportunities that exist today, you might come across a number of “business opportunities” being offered as well.  In order to find out what type of opportunity is right for you (biz opp. vs. franchise), let’s take a moment and examine four primary areas of difference between business opportunities and franchises in order to understand each more completely.

Royalties - First, one of the main ways to spot a franchise from a business opportunity is to see if the system being sold has any sort of royalties or ongoing fee structure.  If the opportunity being sold does have royalties (either as a percentage of profits or as a flat amount cyclically) it is very likely a franchise opportunity.  Business opportunities usually only require a one-time flat fee and no ongoing royalties or payments.

Support - Secondly, similarly to ongoing fee structures, franchises will offer ongoing support and training over the course of your franchise ownership.  Business opportunities on the other hand, will usually only offer support to setup their system with you, and once setup, you are then largely on your own operating and running the business.  In a way, a franchise is sold with the blueprints and ongoing support, materials, and training to help you succeed.  With a business opportunity, you likely only receive the “blueprints” for the business and a few items to get you started in your business.

Branding - Franchise branding is very key to the overall manner in which a franchise system works.  In service under the same franchise brand, a certain product or service is by and large exactly the same, whether it’s served via a franchise located on one side of the country or the other.  Alternatively, business opportunities may or may not require an element of branding in their system.  As there is no ongoing support system in a business opportunity branding may be suggested but not required or followed up on by any means.

UFOC - As you might imagine, there can be some “gray” areas when it comes to franchises vs. business opportunities.  The last and major difference that exists between franchises and business opportunities is that franchise systems always have a legal document, a UFOC (Uniform Franchise Offering Circular) in which to refer to.  A UFOC contains a large amount of information about the franchise being offered, including legal decisions involving the company, fees, buyer costs, and financial statements from over the years.

Posted on September 4, 2008  |   Email This Blog Post   |   Print This Blog Post