Is Network Marketing the evolvement of Franchise?

The global economic recession brought in the spot network marketing as a business model which can help ordinary people to increase their income and in many cases to achieve financial freedom. Also helped companies like Mary Kay, Amway, Avon, Herbalife, etc to become financial giants with very limited running cost. Going back to time at 80’s and 90’s Franchise was the big trend in the business world. But recently many successful business people shifted their orientation to network marketing companies. The reason is to achieve more production with less cost. Warren Buffet was the first who purchased in 2006 a dozen of Network Marketing companies. In the business world this is called a “clue”. Later on he admitted: It’s the best investment I’ve ever made.”

 Shifting from Franchise to Network Marketing looks the solution for many companies as they cut out all their costs like, location, advertisements, employees, etc, and they are communicating effectively with the consumers directly.

Big players like Colgate Palmolive, Gillette and Primerica have established their Networks shelling their products directly to the consumers via independent distributors. As Network Marketing has the old stigma of the “pyramid” it’s worth mention that Primerica Insurance, which is a part of the Global Prudential Insurance, has sold more insurances through Network Marketing than Prudential had this year!  

Let’s examine both business models which have a lot of similarities and see which suits better to this economy.

What is a Franchise opportunity

Franchise is a proven and tested business model. It’s a business that gives you the opportunity to leverage someone else’s product or service and success record. Before you run out and put your hard earned money into a franchise there are a few things you must consider.

You’re going to need a prime location to place your franchise and that prime location will go for a premium amount since it is commercial property.

You can either rent or buy the property. Depending on the franchise and the location you can spend in some cases an equal amount on both. With the franchise comes training to make sure that you have the knowledge and skills necessary to operate a successful business.

You will also have to worry about employees and the personal and professional issues that are associated with being a business owner. Business insurance is a must to protect yourself from lawsuits that may arise from customers or employees that may be injured while within the confines of your operating location. They are only a handful of the things that you will have to consider when choosing the franchise business model. Start up cost can be in the tens of thousands and go as high as several million depending on the franchise and the location.

Considering the franchise fees, the cost of the prime real estate whether you’re renting or buying, the yearly franchise fee, and all the other expenses you have with a franchise you also have to determine how many years you will have to be in business before you can see a return on your investment. Unlike a job, your work days are longer because you own the franchise and have to make sure that everything is running as planned until you can hire and train someone as a manager to relieve you of some of your duties. There are thousands of franchise opportunities available for purchase. From the high end, pricey, well-known franchises like Starbucks, McDonalds or Chick-Fil-A to more affordable and obscure companies that provide products and services for specific niches, you will have a wide selection of franchises from which to choose.The great thing about a franchise is that there is a business model that has been tested and approved and is ready for you to implement. Typically, once you buy into a franchise opportunity you have access to training and tools designed to help you develop a solid foundation for your franchise business.

Network Marketing is often called The People's Franchise because it let almost any body to start the business with very low investment and earn reasonable residual income monthly if you follow the business system.Network Marketing relate very closely to the concept of traditional franchise. Why people buy a franchise because it is branded and has a proven system to run the business and can still enjoy a nice return of investment (R.O.I) when execute correctly. Network Marketing Business though is slightly different. You can position yourself as a franchisee and also the master franchisor. You will still be given the proven system to setup your business. But over here, since you are also a master franchisor, you are able to sell the franchise to other interested franchisee. And this is power! Because of this business model, many people are able to earn exponential income from network marketing if follow the step by step system correctly. The entry level for network marketing is very easy. Anybody with age of eighteen years old and above can start the business already. The low start up cost and system attracts almost any one to kick start the business. Since it is a low investment, they do not approach as seriously as buying a half million dollars McDonald franchise.

Once they join, they do not follow the system, they experiment unproven methods, they promote to people when it's convenient to do so, and treat their business more like a hobby. The worst part is that, they do not duplicate their success and develop leaders. That is why; many people did not succeed in the business. To succeed in Network marketing could also be a challenging experience as any other business. So before you jump in you have to consider a couple of things.

1.Is the product easy to promote and sell?

2.Has the company a proven training system?

3.Is the group you are about to join already successful?

4.Are you willing to treat this business as a business, to learn and apply new skills?

If so, either you buy a franchise or you involve in Network marketing you will become successful. Always remember the Chinese proverb: “To open a shop its easy…to keep it open is an art”