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The best description we found for the differences between a business opportunity and franchise can be found in Business Expert Priscilla Huff’s book, Make Your Business Survive and Thrive. In her book, Huff states, “Generally, an owner starts a business opportunity by putting together an operational manual, business forms, and other materials and then sells the package to other entrepreneurs to get them started in the business. There are no franchise fees. These are smaller operations and more affordable than franchises.”
You can do an internet search on Google or Yahoo for business opportunities and get an idea of just how many opportunities are available. The key is to find legitimate ones and ones that offer all the benefits that Huff recommends.
A franchise on the other hand is different. In Huff’s book she describes a franchise as, ”A franchise is a business opportunity in which the franchisee pays a company for the right to sell and distribute its products or services and uses its trademark and trade name. Franchisees pay an initial franchise fee, and there may or may not be ongoing royalty fees, advertising costs, or mandatory costs of purchasing the company’s supplies to operate the franchise. A franchisee has to follow the company’s procedures, and the total cost may reach thousands of dollars.”
Go ahead and do the same Google search and see how many franchise opportunities are available? You are sure to recognize familiar names when you do this.
Both types of businesses work. It all depends on what you are looking for and what best suits your skills and experience.
One business opportunity that is growing in popularly today is that of starting a home-based tutoring referral business. In June of 2002, Laurie Hurley of Newbury Park, CA opened such a company, providing private one-on-one tutoring. Little did she know at the time that her small home-based business would produce a lucrative six-figure income just three years after launching it. By June of 2005, Hurley decided to market her idea nationwide and assemble all of the ingredients she used to become successful. She packaged it, created another website and sold via the internet. Hurley hoped to attract people like herself, ex-Corporate executives who wanted out of the traditional work environment; people who wanted to control their own destiny and still make a good living. Much to her surprise, not only did Corporate people call and inquire, but so did teachers, bankers, nurses, and financial advisors, individuals that had or were going to be down-sized or laid off. Many of the phone calls coming in were referencing a popular in-home tutoring franchise that was asking about $25K for the same program Hurley was selling, but literally at a fraction of their asking price. Having once been a franchise owner, Hurley was more than delighted to highlight the differences and Home Tutoring Business, www.hometutoringbusiness.com was born.
Hurley’s business model is a business opportunity as opposed to a franchise. Here are some basic differences:
Price - The biggest selling point in a business opportunity via franchise. As stated, In Hurley’s example her packages cost less than $3000, whereas some franchises can cost upwards of $25,000 or more. In today’s economically challenging times, that makes a big difference. With gas over $4.00 gallon in most of the country, record layoffs in the educational industry, mortgage industry, and real estate fields, thousands of talented, driven people find themselves without a job and usually a family to support. Even stay-at-home moms are looking for a way to contribute to the family income. Therefore, price is absolutely a contributing factor for many in determining the business they wish to start.
According to Sean McCusker, owner of Get Connected Tutoring in the greater Portland, Oregon area, “I decided to start a home tutoring business because I had just graduated with a Masters degree and the prospect of a job in my specialty field wouldn’t be worth the pay. I would also be giving up seeing my two small children grow up and that would mean missing a lot.” Sean and his wife decided that being home-based with no overhead and no employees was the way to make a living and give back to their community.
Your Own Terroritory – Business opportunities normally don’t have a specific territory. This can be a big contributing factor in determining what is right for you, especially with the growth in the Internet, and the ability to market globally. Most business opportunities don’t have defined territories and buyers are free to work as large or small of an area of their choosing. As an example, Jeff Bibler in the San Diego area started a tutoring service, Better Report Card Tutors that covers the San Diego and the outlying suburbs of Encinitas, Carlsbad, Oceanside and other cities which accounts for about 2.5 million people. That’s a lot of territory. Franchises offer a limited territory, charging extra for a bigger geographical area. A franchise would let one work that large of an area, but the price would be considerably higher than their initial asking price.
Support - Franchises rarely provide on-going support. Once you buy, you are basically on your own or can call into a call-center where an operator or someone in one of the many “departments” will answer your question, sometimes the next day. When one is starting out, questions arise all the time and having the ability to have someone to answer those questions is priceless. Business opportunities offer ongoing support and usually on a more personalized basis.
Cathy Hogg, Owner of Beyond The Books Tutoring in Middlesex County, New Jersey puts it like this, “Laurie Hurley had several years of experience that could support me in starting up a new business. I knew that she could guide me to being successful and help me avoid the mistakes that could have happened if I did this myself. ” That’s the kind of support most are looking for when starting their own businesses.
Royalties – Contracts – Business Opportunities normally do not collect royalties or involve any purchasing contracts. A franchise almost always charges a percent of gross monthly income; anywhere from 3-15%. Additionally, most business opportunities don’t require a contract, nothing needs to be signed, and one is not bound by a complicated set of legal rules and regulations.
Business opportunities often provide additional features. For example Hurley’s package provides a personal, professional website to every buyer. The site is not a corporate site, it is a customized site that reflects the buyer’s company name, cities and school districts serviced. A franchise uses one corporate site with possibly a list of where the franchises are located and a contact number. Having an interactive website of one’s own where customers can contact the owner of the company, is a big plus and adds up to more sales.
These are the main differences between a business opportunity and a franchise. If you would like additional information, stop by the Home Tutoring Business site at http://www.hometutoringbusiness.com and see a business opportunity in action.
Laurie Hurley lives and works in Newbury Park, California with her husband and two daughters. For more information on how to start your own tutoring business, contact info@hometutoringbusiness.com or visit http://www.hometutoringbusiness.com for a complimentary consultation to see if your skill set is a good “match” for this business.
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