Network Marketing vs Franchising

Network marketing and franchising are two-income paths that have some similarities and some differences. They can both be a path to building wealth, but one has fewer financial obstacles to overcome. Let’s take a closer look and see why network marketing might be a better path for you.

Similarities: You are buying a proven process and a proven product

A big reason people go into network marketing or choose to purchase a franchise is that you can jump into a business that is basically set up for you, ready to go.

With a franchise, you are buying into proven systems of baking bread, cooking hamburgers, fixing HVAC systems, or whatever products/services are being sold by the franchise. You are provided with all the tools you need to produce the same results as any other franchisee within the organization.

Differences: Time and Money

Responsibilities in a franchise are more “soup to nuts.” Sales, marketing, purchasing, human resources, managing overhead – making sure all aspects of the business are running smoothly is up to you. On the upside, for all your trouble and investment of time and money, you get these proven systems that should result in a healthy return on your investment.

Owning a franchise requires a higher investment, from tens to hundreds of thousands or even a million dollars. Usually, it requires your full-time attention, as you are likely running a brick and mortar business with standard hours of operation. You will need to comply with the company’s standard business practices.

In network marketing, the focus is on selling products and recruiting new salespeople. Compared to a franchise, network marketing requires minimal upfront costs, and the structure of your day is up to you.

Network marketing companies may require a minimum purchase each month, so be aware of those potential ongoing costs. Read the fine print of an organization’s compensation plan and the responsibilities you have as a sales representative, before you sign on the dotted line.

In a previous article, I went over some statistics related to network marketing. One of the starkest numbers relates to longevity in the business. After five years of operation, on average, 90% of the representatives leave the company. Let’s just say it’s not everyone’s cup of tea.

The Upshot:

If you have the resources and are looking to be involved in every aspect of a business, buying a franchise might be the right call for you. You can be a shot-caller and you will get to know all the ins and outs of running a business, from leasing or purchasing space, to purchase orders, to making payroll. But do your due diligence and find the right fit in terms of product and culture so you make the most of this opportunity.

However, f you are looking for a lower cost of entry, flexibility, and taking over just the sales and team-building aspects of running a business, network marketing could be the right move to make.

For greater flexibility, and if your strengths are in sales and networking, then network marketing can be a great opportunity. Like any endeavor, you get out what you put in. If you are looking for price breaks on products and an extra $500 a month that statistics say makes such a big difference in American wallets, this is a great way to get those goals accomplished.

And if you want to make network marketing your main source of income, the sky is the limit. The challenges in doing this are not to be ignored, but the potential upside should not be ignored either.