What is the Difference between Network Marketing and Franchising?

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If you are wanting to start you own business, either full time, or part time, you may well be confused about the number of business models to choose from.

Franchise Businesses

In the franchise business model, a successful cookie-cutter business is replicated in another location, and all materials, training, and resources are provided to the franchise owner for a certain up front fee, a royalty percentage on items sold, and normally the franchise owner must purchase product and packaging etc. from the franchise owners.

Franchise businesses often have the advantage of a proven business system, but the disadvantage that they are very expensive to invest in. They are out of reach of the average person. For example, a McDonald’s fast food burger franchise will cost anything upwards of £1,000,000.

In effect when you buy a franchise, you are buying yourself a well paid job. Everything you need should be provided, but it’s up to you to run the franchise according to the system designed by the franchise owner. If you don’t perform to their expectations, they may reserve the right to take the franchise from you.

Another limitation of franchises is the geographic area. If you want to expand into other areas you will need to purchase more franchises to cover those areas, and again this can be expensive.

mlm duplicationNetwork Marketing Businesses

A network marketing business is similar to a franchise, in that all the business systems are provided, included a proven product line, marketing materials, training, and back office systems.

However, the cost of starting a network marketing business is normally at the fraction of the cost of a franchise business, and there are usually no limitations over the geographic area you can operate.

Sometimes called direct-to-consumer, direct selling, or MLM (multi-level marketing), that element is just one way that you can get paid in a network marketing business.

You can retail products, just like a franchise owner, and make your own retail mark-up on those sales, or you can refer clients online and earn a percentage commission on those sales, in a similar way to an affiliate program.

The major advantage of the network marketing business model is that you can expand into other areas and get paid on those sales through the networking aspect – ie, by recruiting other business partners who will also retail the product to their network of contacts, and you get paid an override on their commissions for first finding them, and secondly helping them to get started building their business.

Which business model is best for you?

Both business models are very similar, the network marketing business model can be seen as being like a mini-franchise, but the earning potential can be just as high, depending on the amount of time and effort you put into it.

Running a successful McDonald’s franchise is very hard work, just ask any fast food franchise owner. Most of them work more than 40 hours a week on their business.

The problem with network marketing is that due to the far lower cost of entry, many people don’t take their network marketing business as seriously as they would an expensive fast food franchise.

If you work a network marketing business as hard as you would a franchise, you can not only profit on your own personal sales, but you can become a leader, and inspire whole teams of people all over the world to empower themselves by starting their own business, and get paid an override on everything they make.

In a franchise, if you help someone else to launch their own franchise in the same company, you don’t earn anything. Network marketing companies pay you to do the work that a franchise training department would normally do.

Team building suits many people who enjoy the mixture of their own personal work, and working together with others as a team towards the same goal. It can be like having an extended family of like-minded people.

My advice is find a company that has a mission that aligns with your own goals.

If you’re into health and fitness, choose a health and fitness company. If you love makeup, there are makeup companies too. If you love travel, there are even travel-specific companies to choose from.

You will find all types of network marketing companies out there, so no matter what you are passionate about, you will find a company that you can get excited about. You’ve got to be able to get excited about it on a daily basis to succeed.

Network marketing is a real business model. It’s a way that everyone can build an additional income, without needing to come up with everything from scratch.

It does take time to build a successful network marketing business, and you have to keep investing effort on a daily basis to keep it growing, but the rewards for consistency over time can be very well worth it.

For the small initial investment, network marketing can be a great investment, if you are willing to put the time and effort in to build it.

Network marketing businesses do not build themselves. Don’t be fooled by hype, easy earnings are not possible with any type of entrepreneurial endeavor.

If you want to learn more about growing a network marketing business using the internet, please subscribe to my YouTube channel.

 

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