Which home based business is right for you?

A Franchised or Non-Franchised Home Business Opportunity...Which is Right for You?

Some home based business opportunities are structured as 'franchised' business systems.

What does that mean for you?

And how do franchised business opportunities compare with non-franchised business opportunities?

One of the things you will have to determine for yourself as you embark on the journey of owning your own home based business is which business model suits you better -- a franchised or a non-franchised business opportunity. This article will clarify the differences, as well as the advantages and disadvantages of both.

A franchised business authorizes you to distribute and/or sell a company's goods and/or services under specific terms in a specific location. When you buy into a franchise, you become a franchisee. You will own the business you open, its infrastructure and the rights to use the trade name, brand, and promotional materials of the parent company. There is usually an upfront 'franchise fee' and possibly ongoing franchise fees or royalties that are paid monthly, quarterly, or annually. Extensive initial and ongoing training is almost always included. Franchises are required by law to have a detailed disclosure document available for your review called the UFOC. It describes every aspect of the franchised business opportunity.

A non-franchised home business opportunity involves the sale or lease of any product, service, equipment or idea that will enable the licensee/purchaser to begin a business based on the company's business model. The licensor/seller often offers assistance in selecting a suitable location, and almost always offers initial and on-going training and support to help run the business. Unlike a franchise, the company's name, logo, and how it's legally set up can be individually decided licensee/purchaser. Often a licensee/purchaser must agree to buy product exclusively from the licensor/seller. While not required, a non-franchised business opportunity will often have a disclosure document available describing details of the business.

Both opportunities have their advantages and disadvantages, the question is which one is right for you?

Advantages of a Franchised Business Opportunity:

• Often provide services like ongoing and initial training, promotional benefits, trademark rights, and marketing support.
• Provides detailed protocol regarding business set up and operational procedures which often accelerates the start-up process.
• Allows use of recognizable, branded trade name, potentially increasing familiarity amongst customers and enhancing the odds for success.

Disadvantages of a Franchised Business Opportunity:

• Franchisee must surrender freedoms regarding choice of business name, operational procedures, and products or services offered.
• Often more expensive to enter into than a non-franchised home business opportunity.
• Often requires ongoing fees or royalties.

Advantages of a Non-Franchised Business Opportunity:

• Often a lower initial fee is required, with no ongoing royalties.
• Often allows freedom to choose business name, logo, and manner in which the business is operated.
• Often provides services such as initial and ongoing training and marketing support.

Disadvantages of a Non-Franchised Business Opportunity:

• Sometimes does not provide ongoing support.
• May require commitment to buy products from parent company even if lower cost suppliers exist elsewhere.
• Not legally required to supply a disclosure document detailing all aspects of the business opportunity.

Both franchised and non-franchised business opportunities offer proven systems of operation and successfully sold products and services. They often both offer good financing options, site selection assistance, promotional support, and ongoing counseling and/or training.

Before deciding which type is the one for you, consider your personality, your strengths, your weaknesses, and your needs. Whichever direction you chose, be sure to thoroughly research the company before investing in a home business opportunity. Also, you may want to review the Pre-Investing Advice article in our Resource Center.