I’d like to make sure that you understand the difference between a home-based franchise, and a work-at- home “opportunity.” The differences are huge. . .
A franchise is a licensing system by which the owner (franchisor) of a product or a service licenses others (franchisees) to market and sell the product or service within a defined territory, following the guidelines established by the franchisor.
There is an up-front franchise fee, and you’ll be paying a percentage of your gross sales to the franchisor. Franchises are regulated by the government, and the seller must give you a detailed disclosure document at least 10 business days before you pay any money or legally commit yourself to a purchase.
Here are some examples of some home-based franchises:
Kidzart- Children’s art instruction
Plan Ahead Events- Local event planning
Bark Busters- Dog training
Then there is the “Business Opportunity,” which operates differently from a franchise business. The investment amount is a lot lower. Some business opportunities can be purchased for a couple hundred dollars.
A business opportunity generally doesn’t have the tight structure that a franchise business inherently has (and needs). There are usually no territory restrictions with a business opportunity, and there are no royalties. Some business opportunities are actually MLM (Multi-level Marketing) types of businesses.
Some examples of business opportunities are:
Vendstar- Vending machines
Stuffing Envelopes.net- Envelope Stuffing eBook
Carbon Copy Pro- Direct sales
Could any of the franchises or business opportunities that I gave an example of above be considered scams? I’m not sure, actually. Here’s the definition:
“A scam is a scheme for making money by deceptive, dishonest, or fraudulent means.”
The word “scam” tends to be bandied around by people who lose something they didn’t think they would lose, or know someone that did.
- “I was scammed by that car salesman.”
- “Investing in that penny stock was a scam.”
- “This 2-For-1 Pizza Special is nothing but a scam.”
- “I heard that Nancy’s work at home medical billing business was nothing but a scam.”
- “I see that Harvey’s coffee shop franchise turned out to be a scam.”
Is it possible that any of the folks making these statements missed something? Is it possible that their emotions got in the way of fairly simple logic? Did they forget to do the necessary research that is required to make a fact-based decision? Have you ever done something similar? I have.
If you are going to look at any type of home-based business, it’s really up to you to do the research that’s required, in order to make an intelligent choice. The internet has made it possible to do almost all of your research right from your home computer. There are several good resources, including this one at Business.gov that has an entire section on home-based businesses, both franchise and non-franchise types.
Dig in. Don’t let yourself get scammed.
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About the Author: Joel Libava is President and Life Changer of Franchise Selection Specialists. He blogs at The Franchise King Blog.