Franchises & Biz Opps: What's the Difference?

This story appears in the March 2010 issue of Startups. Subscribe »

For those looking to run a business without having to deal with the hassles of starting something from scratch, franchises and business opportunities are a good fit, and there are thousands to choose from in all kinds of fields. But what are the differences between franchises and business opportunities, and how can you determine which of the two is right for you? Here are some of the key differences between franchises and biz opps.

 

	FRANCHISES	BUSINESS OPPS
Branding and Operating System	All units operate under a common brand and operating system (all locations must be consistent).	No requirement to operate under a common brand and operating system, which offers the flexibility to change things in the business.
Pay Ongoing Royalties?	Yes, in addition to the upfront franchise fees.	No. The initial fee is generally the only payment needed.
Ongoing Support	Offer contractual agreement to provide support, including marketing and training, during franchisee's entire tenure.	May also provide ongoing support, but most are not contractually obligated to do so. It's usually based on demand for support.
Legal Disclosures	Must provide a Franchise Disclosure Document that includes information about the company and the franchise opportunity being offered.	Not required to provide all of the company information required in an FDD-style document, but they may have to meet state requirements related to disclosure.
Research	Names, addresses and contact information of all franchisees are included in an FDD, so extensive research of existing franchises is possible.	Locations are under different names instead of a single brand, so finding all businesses under a biz opp is more difficult.