If you’re considering starting a business, buying into a franchise is a very popular option. But as you explore the world of franchising you will probably also learn about something known as a business opportunity. Business opportunities are similar to franchises, but they also differ in some very important ways.
A business opportunity is a package you buy that contains all of the main articles you need to start a given business. It’s like a franchise and it’s not. One difference is, with a business opportunity there is usually no ongoing relationship between you and the company you buy the opportunity from. On the other side of the coin, with a franchise, you will have to follow the systems put in place by the franchisor. With a business opportunity, you’re free to run the business however you want. In addition, you usually won’t have to pay royalties. On the other hand, if your new business starts to stumble, you might not have anyone you can turn to for help. Also, because business opportunities are not regulated like franchises are, there are some scams out there disguised as opportunities.
Whatever kind of opportunity you decide to try, you must make sure to protect yourself. Even though a business opportunity typically costs less than a franchise, you still need to do your homework before you buy. First, do not fail to investigate the business opportunity just as you would a franchise. Some states regulate business opportunities, and in those states, sellers may be required to give you a disclosure document at least 10 days before you buy the opportunity. Make sure to contact your state’s attorney general’s office or consumer protection agency for more information. Other good things to do are to check with the Better Business Bureau and talk to current and former licensees who have purchased the business opportunity. Don’t just talk to the names picked by the seller, try to get a list of everyone who has bought the opportunity. If the seller is slow to provide this type of information, beware!
Franchises are a tried and true method of starting and owning a business of your own. Business opportunities can provide the same start but with more freedom comes more risk. Always do your homework, and know what level of risk you and your family are willing to live with.