What’s The Difference Between a Franchise and Business Opportunity?

They may seem the same, but really there’s some big differences when it comes to a franchise and business opportunity

One of the biggest things popular franchisors such as McDonalds, Burger King, and the like offer is their brand- a licensed trademark.  As Entrepreneur.com says, it’s a “consumer magnet”.  People are attracted to franchises because they’re using a licensed brand.  Whereas, with a Business Opportunity, the buyer is often paying for the system or “business in a box”.

Getting into a big franchise like McDonalds requires substantial capital.  For a lot of people looking to go into business for themselves start off smaller.  There are over 4,000 franchised brands on the market.  Some are growing brands, like Ultragloss.  So while the brand may not be as recognized now, opportunities like this are often more affordable.

Business Opportunities typically require less capital to start than a franchise operation.  There is little on-going support for these opportunities.  Typically, the support is in the form of instruction manuals and recorded tutorials.

On the other hand, a franchise opportunity offers on-going support which is typically what the royalty fee covers.  For each franchise brand the royalty fee and what that fee covers varies.  For example, the Ultragloss royalty fee covers the use of the Ultragloss license, on-going support, refresher training, discounted quality supply costs, research and development, software updates, and other technical aspects of the business.  Some franchisors have separate fees for use of their registered trademark, Ultragloss includes that as part of their royalty fee.

Both styles of opportunities are based on a “proven system”, i.e. a business model that has proven to be successful.  Franchisors are required to disclose the earnings of their franchisees as part of their Franchise Disclosure Document (FDD).  Not all business opportunities are required to have strict disclosures.  Franchises have very strict requirements and are often held to higher standards than business opportunities.

Unlike a business opportunity, a franchise system can be more restrictive in terms of the price setting, business location, and other day-to-day business operations.  After all, part of the franchisor’s system to generate a consistent brand that customers recognize.

So which is right for you?

That greatly depends on what you are looking for.  For most people, cost is one of the first things considered.  A business opportunity’s cost may vary, ranging from a couple hundred to a couple thousand dollars.  Whereas a franchise opportunity can range on the low-end from $30,000-$50,000 and up.

What kind of support are you looking for?  The franchise industry often says, “be in business for yourself, but not by yourself.”  As discussed earlier, franchises offer on-going support and business opportunities often have little (if any) on-going support.

Why not talk to an expert?  The Franchise King and other franchise and business consultants can help direct you in your ventures.

And you’re welcome to request more information about the Ultragloss Franchise here.