To Network Market or to Franchise?
More than any other form of marketing, franchising resembles Network Marketing in that they’re both centered on offering a proven “turn-key” business system for distributing products and services directly from the manufacturer to the consumer.
In franchise marketing, the (franchisee) acquires a license to allow him to have access to a business’s (the franchisor) proprietary knowledge, processes, and trademarks in order to allow the (franchisee) to sell a product or provide a service under the business’s name.
There are similarities between Network Marketing, and Franchise Marketing. Franchisees are in direct partnership with their “parent” company as are Network Marketing distributors. They both provide the customer contact — the sales, and service retail relationship with the consumer, and you pay your own expense-ways — relieving those significant cash burdens from the company. In return, the corporation gives you management, research, and development, and new product development, data processing, public relations, warehousing, order entry, and services, provides marketing, and promotional materials, advertising, accounting services, training support, and more. There are differences between the two systems.
In network Marketing, you don’t need A store front TO OPERATE FROM, you can operate from home.
Those in Franchise Marketing have high costs, and can pay an average of $85,000 to play; whereas those in Network Marketing only invest as few as hundreds of dollars, to a few thousand dollars to start their businesses.
Think about this:
If you are a Franchisee, you pay ROYALTIES: franchisees pay back a percentage of their sales to the original company (whether they make a profit or not), but in Network Marketing, the company is the one paying the royalty commissions. Size of the company makes a big difference as well. The bigger the company, the more you pay. Not so in Network Marketing as the worldwide business is much smaller.
Franchise marketing did get a head start. The Singer Sewing Machine Company opened the first franchise in history, back in 1863. Network Marketing got its start in the 1990s, and Network Marketing has been experiencing astonishing upward growth, as people are seeing how to make money at home.
According to Fortune Magazine regarding franchise marketing, they once commented: “the current state of the franchise nation can be summed up in two words — deeply troubled. For all there past successes, precious few systems are minting money for franchisees today. Most markets are crowded, and expenses are rising. Even worse, new evidence suggests that the whole franchising model, far from being a consummate business paradigm for the late 20th century, as its advocates claim, is so riddled with problems and ill will…”
Lawsuits against franchise companies are up . . . plus there are the higher than advertised failure rates: A Wayne State University researcher found that 33 percent in 1991 compared to 28 percent for “other small businesses.” Recently Bloomberg Business reported, 8 out of 10 entrepreneurs who start businesses fail within the first 18 months.
To Think about:
Which is worth investigating if you wish to have your own business? Network Marketing, or the costly Franchise Marketing? You be the judge!