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Why Franchises Are Better Options Than MLMs

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At some point, we all dream of owning our own businesses. Not all of us, though, want to have to build something completely from scratch. If this sounds like you, you have basically two options: you can open up your own franchise or you can join a Multi-Level Marketing (MLM) program.

Let’s stop right here and be really honest: you aren’t going to join an MLM program. Why? Because most MLM “programs” are nothing more than poorly disguised pyramid schemes.

Here is how most MLM schemes work: you pay a “membership fee” (that often recurs monthly whether or not you make any sales) and then get to work. Often you are sent a product to try to unload, but sometimes what you’re selling is digital. Your other important task is to recruit people to work as part of your “downline.” Why? Because you get a percentage of everything that person earns--whether it is through a sale or a new recruit. You also get a percentage of everything made by the people they recruit.

In the world of MLM, if you recruit enough people to work as part of your downline and they recruit enough people to work in theirs, you’ll never have to do any actual work.

You can see the problem with this, right? If nobody is actually making sales and is only trying to recruit people, eventually the whole thing collapses. And nobody earns anything. More likely, you’ve paid thousands in monthly fees for very little (if any at all) return.

Franchises, on the other hand, while not necessarily a sure thing, are a far safer investment. Yes, they do require a much larger amount of money to get up and running. According to the UPS Store website, UPS franchise profitability depends on an initial investment of between $100K-$300K (yes, there is financing available). The difference is that any profit you turn after that initial investment is yours to keep.

The primary benefit of buying into a franchise opportunity is that most of the time you will be working with an already established brand. People already know and trust that brand, so a lot of your initial marketing work is already done. What’s more, you get the support of the brand via their regional and nationwide marketing pushes. They also help mitigate the cost of signage and promotional materials as well since--instead of making you create your own, more often than not you will be required to use the materials provided by the brand’s corporate offices.

There are a lot of different types of franchises--you are by no means limited to fast food (which is the most well-known opportunity in the franchise world). UPS is another good option. Why? Because the love and trust people have for the USPS is starting to wane and more people are turning to private delivery services like UPS to get their mail where they want it to go. Everybody needs to mail stuff, right?

Even if you do decide to open a fast food franchise you’ll still be able to draw upon that brand’s already loyal customer base, especially if you live somewhere with a population that has been clamoring for that brand to put more (or even a first!) location nearby. If you have good employees and a clean space, you might even be able to siphon off customers from other similar franchises nearby.

Finally, Franchises are superior in that they give you the opportunity to own your own business in a supportive environment. With an MLM, you’ll be more likely to have your “supervisor” hounding you about making more sales and bringing in more recruits. Why? Because they make more money that way. MLM presents itself as an entrepreneurial opportunity, but make no mistake: you will have a boss. With a franchise, they want to help you do well because they can use that success to further build their brand.

Look, we’re not saying that there aren’t legitimate MLM opportunities out there: Avon, for example, is a reputable MLM company. Most of them, however, are get rich quick schemes designed to prey upon the vulnerable, so do your homework before you decide. Franchises give you a real business that you run (mostly) on your own, how you think it should be run. If you have money to invest in a business venture, a franchise will give you more freedom and a legitimate business for your money.

So really...why are you still struggling with this decision? You know the right thing to do.

The opinions in this article do not necessarily reflect the opinions/beliefs of Lazy Man and Money, Lazy Man, and/or Perfect Plan Publishing

Posted on August 8, 2016.

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