Multilevel Marketing Is Not A Franchise

May 5th, 2008 | by Chris |

Although self evident to someone in the general public or the traditional business world, many times network marketers in order to describe their industry and the way they operate the describe it as a form of franchise. It’s easier to explain to someone how we operate by making such a generalization and in a way, theoretically, multilevel marketing has a similar form and function and its structure may be perceived as an enhancement of the franchise model.

But no matter how much they have in common and how parallel they seem to operate they also have huge differences that in my opinion set them as two worlds apart.

Let’s see first how a franchise operates. The mother company sells you the system it created, helps you identify a location to open your shop, it trains you and your personnel and then you start working in it, while they do the marketing and advertising from which you benefit. In essence it’s like you buy a production machine and you start operating for profit.

Solid Gold McDonald's
Photo by Adam Lautenbach

Now let’s take a look at MLM. One of the M stands for Marketing because this is what you are supposed to do. The marketing. The company handles all the other things like production, delivery, logistics and your paycheck while your job is to bring the customers. The exact opposite of the franchise model.

And actually the hardest part of the job. It’s much more easier to operate an outlet system than to operate a marketing one. I am sure that if franchises were to operate the other way round we wouldn’t be talking about the massive success of that business model today.

But then what’s in it for the network marketing participants, why to choose this hard way to business?

Well for everything in life there is a trade-off. Multilevel marketing may be harder to practice but it comes with a very low entry cost for the participant compared to brick and mortar business that would require tenths of thousand of dollars in start up capital.

Everyone that is entering into our industry should bear this in mind and be aware of the trade off that he is making. Not need to delude himself that is entering a sort of or a “private” franchise because he doesn’t since we do the exact opposite.

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