In a franchise, the franchisor has a successful business model that he/she licenses to a franchisee, similar to a group of chain stores.
The franchisor is the head of the “chain stores” and the franchisees operate the “chain stores” that have to adhere to strict terms and conditions and the franchisees pay the franchisor a fee for purchasing the right to use the business’s trademarks, brands, training, access to suppliers and business knowledge. The franchisee also gets an exclusive site for their franchise operation, so that there is no competition from another franchisee in the area.
If you are interested in starting a franchise business, you can get more information on legitimate franchising at The American Franchisee Association and The American Association of Franchisees and Dealers.
Business Opportunities (Bizzopps)
A business opportunity is a business investment package that allows the buyer to start his or her own business independently.
Currently, the Federal Trade Commission (FTC) and 25 states all have slightly different definitions and laws as to what constitutes a business opportunity.
What is the difference between a franchise and a legitimate work from home business opportunity (or Bizz Op)? See franchise help for a good explanation.
|Franchise Opportunity||Real Home Based Business Opportunity|
|Relationship between buyer and seller||Ongoing||Independent|
|Support||Ongoing||Little to none|
|Fees||Annual fee plus profit share||Upfront fee|
|Terms and conditions||Must follow rules and guidelines||Varies from some to none|
The FTC has regulated home business opportunities through legislation called “The Business Opportunity Rule”. It provides comprehensive protection for people considering investing in a home-based business opportunity.
This FTC video describes the disclosures a seller has to provide and rules governing these disclosures. (Please note that it takes a moment or two to load).
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