To those without experience, a business opportunity and a
franchise can seem identical on the surface, but not being wary
of the differences could leave you in a situation that's not
quite what you expected. The two terms intersect one another in
that every franchise is a business opportunity but not every
business opportunity is a franchise. There are a number of legal
definitions for both terms. Put simply, a business opportunity is
a prepackaged business investment that the buyer manages himself.
It doesn't put any regulations on the buyer or the way he manages
his business. Once the investment has been made, the relationship
with the seller ends.
Business opportunities need to be handled with care in foreign
countries because the term sometimes carries different
definitions. This can be confusing, particularly in North America
where statutes have been passed that regulate business
opportunities to such an extent that their definitions often
The typical lack of regulation and control in business
opportunities has advantages and disadvantages. To look at these
more clearly, they need to be contrasted with franchises.
Franchise operations come with control measures and supportive
structures. Franchisees are given extensive training in the
industry they've chosen. They're supported in a number of ways by
the franchisor. Their payments might be handled by the
franchisor, for example and their schedules are often arranged
externally so that the franchise is given an instant
A franchise must necessarily have three core
1. Continuous fees or royalties.
2. A ready-made business structure.
3. The permission to use the trademarks in business
Franchise relationships end only if the franchisee closes the
business. A franchisor will usually conduct some form of quality
control on goods or services offered and the ways those products
are bought. Royalties, too, are continuous. In exchange, the
franchisee is given a solid brand that has proven its value and
potential in the marketplace. The trademark will usually carry
plenty of weight with consumers, providing instant brand
recognition that few other start ups are afforded. Training and
guidance are further tools gained in exchange for fees. They slot
the franchisee into a smoothly operating machine more seamlessly
so that a gradual learning curve is experienced. Advertising and
marketing is largely carried out by franchisors. One of
franchise's most characteristic icons is the trademark licence.
Every franchisee's operations are made possible by the license
they hold for using that trademark. It's the symbol of the
strength of the business and its impact in the market place is
mimicked in every franchise that operates under it.
In contrast, business opportunities are less structured. More
regulations are starting to appear for this business model so
that registration and disclosure documents are legal requirements
investors have to heed when they purchase.
While the supportive structure a franchise offers may seem its
greatest selling point, it is the trademark that yields the most
weight. They command instant power over consumers. Those who spot
them have immediate expectations of identical experiences in
every franchise that carries that icon.