Maybe you’re thinking of becoming a small business owner via purchasing a franchise. Or perhaps you just want to be in the know on franchise lingo. Either way, today’s post will help you make sense of the sometimes confusing jargon of the franchise world. Today we’re looking at alternatives to franchises – distributorships and licensing agreements.
There are two main ways to expand business besides a franchise agreement:
Distributorship As a distributor, you work with a supplier. You buy from the supplier, sell in smaller quantities, and may do business with many companies in addition to the supplier. You would be the expert on your markets and customers. Unlike a franchise agreement, a distributorship does not necessarily offer you support and training. On the other hand, some distribution arrangements are similar to franchises, depending on how much authority you have in running the business. Examples of distributorships include Amway and Mountain Life Spring Water.
Licensing agreement In this situation, you pay for the right to use a trademark or logo. The licensor (the one selling the rights to you) doesn’t really have a say in how you run your business, as long as they can collect royalties and maintain control of the license. Examples of licensors include Netscape Communications and Apple Computers.
Do you have experience with franchises, distributorships, or licensing agreements? Post your comments below. If you are thinking about a franchise opportunity, talk to your local FranNet consultant and receive your free Personal Franchise Assessment to get matched to the right franchise for your business personality.