Nigel Mayne

A Franchise Or Network Marketing? Nigel Mayne Discusses

Small business entrepreneurs look for an investment opportunity to make it in their own business venture for a number of reasons.  Those new to self employment know they need a proven business model.  How to steer clear of the unethical practises, moral traps, get rich quick scams and other fraud practised by a few bad apples in any business? 

For any number of reasons, small business entrepreneurs look for an investment opportunity to make it in their own business venture as opposed to having one or more income streams from salaried positions in the workforce.   Most likely have to borrow to finance not only start up and initial fees costs, but also to cover working capital requirements for some time.  Those new to self employment know they need a proven business model.  Friends may have suggested network marketing options, and yet the very public front of a successful franchise system is more attractive.  How does the investor you best steer clear of the unethical practises, moral traps, get rich quick scams and other fraud practised by a few bad apples in any business?  

Multi-level marketing (MLM) is a system of retailing by independent distributors, often in consumer homes, and compensation is a percentage of the sales made by the business owner`s sales force.  There is often comparatively less money required for the start up investment, but the investor/owner has to manage a large network of wholesalers that he or she must build from scratch and develop their own growth and management strategy going forward. 

MLM carries the taint of being a front for pyramid schemes, illegal scams, and other fraudulent activities.  MLM is a legitimate business in the US; there are a few illegitimate, fraudulent schemes and variations that collapse and leave all suffering.  Ponzi schemes are an example of this - remember Bernie Madoff?   Beware if first meetings focus more on requirements to purchase high cost inventories and on recruiting other investors than on the product or service to be sold. 

What should the new investor know before taking the decision to look for a franchise that is the best fit?

• Be very comfortable that the model suits their skills and knowledge.
• Successful franchises are run rigorously.  The small business owner runs the local business with the support of the franchisor.  
• The franchisor wants success. They have the map, the tried and true plan, the “how to” manuals, the expert trainers, the savvy and focussed marketing teams.  The franchisee concentrates on well mapped operations.  The business focus is clear, so well defined.
•  On the other hand the MLM company will encourage the new owner to find, manage and motivate and pay their own sales force.
• With a franchise model the franchisee abides by the contract with the franchisor business partner.
• The network marketing model allows the business owner to be more entrepreneurial, more creative which isn’t always a good thing – especially if a proven business plan is the better alternative.

All would be investors are advised that either of these options aren`t get rich quick schemes, and there is likely up to 5 years real commitment of capital, energy, time and focus before the entrepreneur can pause and say they have successfully built a business.

Whichever path is chosen, the new business owner should focus, focus, focus on the product or service they are marketing.  The success in business will depend on how much product or service is sold, and how efficiently.  The best advice offered at the outset is that they decide on the business option that best suits them and avoid wasting time on offers that carry even the faintest taint of con schemes and fraud.

MatchPoint Franchise Consulting Network was founded in 2006 with a mission of helping companies expand their franchise networks and improve their system  Advice is offered freely to franchise buyers on the web site and by MatchPoint consultants in the field and is vital to the buyer  for a better, prudent, buying decision.  The advice offered by our consultants does not make us lawyers; it is there to help the investor with a high quality due diligence process.  It is an effective hedge against misrepresentation and fraud sometimes propagated by less than reputable business opportunity marketers.  

MatchPoint consultants trained by Nigel Mayne know the red flags of fraud in the investment field.  It takes the very few promoters that practice business fraud to taint the dream of the franchisee and their family.  

That`s where seeking the independent advice of an expert franchising consultant is prudent and invaluable. 

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