The Home Zone

Biz Op ABCs

The term "business opportunity" is often misunderstood because it covers so many types of businesses (including franchises). This story and the listing on page 47 focus only on nonfranchise business opportunities. These fall into five categories: dealers/distributors, licensing businesses, multilevel/direct- sales businesses, coin-operated businesses and cooperative buying groups.

1. Dealers/distributors: Individuals or businesses who are granted the right to buy wholesale and sell retail Business XYZ's products, but aren't entitled to use XYZ's trade name. An authorized Apple Computer dealer, for instance, may have an Apple sign in his window, but he cannot call his business Apple Computer. While the terms dealers and distributors are often used interchangeably, there is a slight difference: A distributor may sell to a number of dealers, while a dealer usually sells to a retailer or consumer.

2. Licensing businesses: Trademark/product licensees receive access to the seller's trade name as well as specific methods, equipment, technology or products. If Business ABC has a special method for detailing cars, you will learn its method and get the equipment and supplies needed to set up your own business. You may or may not call your company Business ABC, but you will become an independent licensee.

3. Multilevel/direct-sales businesses: Individuals sell products through their network of friends, neighbors, co-workers and so on. In some instances, you can earn additional commissions by recruiting other agents.

4. Coin-operated businesses: The seller provides the machines and the locations where they'll be placed, and the buyer restocks or services the machines along a specific route.

5. Cooperatives: Loosely resembling a licensing arrangement, these allow an existing business to affiliate with a network of similar businesses, usually for advertising and promotional purposes.

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This article was originally published in the September 1999 print edition of Entrepreneur with the headline: The Home Zone.

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