Multi-Level Marketing is under the same scrutiny Franchising was years ago.
Franchising barely made it through Congress as a legitimate business venture and the same investigations are being made into the validity of MLM - so far, so good! In many ways, MLM compares to franchising, but in many ways it far exceeds the potential of any Franchise. Think about this:
You can start most MLM businesses for a couple hundred dollars or less! The start up costs are small and so is any investment you may need to make to keep your MLM business going. You do not need to buy land, build a building, hire employees or any of the other costly things related to starting a Franchise. Below are some examples of the costs involved in franchising some well known stores. I was amazed at the overall expense and difficulty involved with franchising. With MLM, your start-up costs are small and your income could rival that of a Franchise.
According to Franchise Times, the average Franchise Fee to start a Business Services Franchise is $21,380, with the average Initial Investment being $79,386. Plus most of the franchisors charge a Royalty of 1-12% for the use of their name and logo.
Jani-King, a commercial cleaning service, has over 4,000 franchises nationwide. Its Franchise Fee ranges from $4,500 to $33,000, with a very low (compared to the average above) Initial Investment of $3,000. AND you have to pay a 10% Royalty for the use of the Jani-King name and logo.
Mail Boxes, Etc., a shipping and packaging company, has almost 3,000 franchises nationwide with a Franchising Fee of $25,000 and an Initial Investment ranging from $97,000 to $145,000. AND you have to pay an 8.5% Royalty for the use of the Mail Boxes, Etc. name and logo.
Sir Speedy, Inc., a printing and copying company, has nearly 800 franchises nationwide with a Franchise Fee of $20,000 and an Initial Investment ranging from $125,000 to $175,000. AND you have to pay a 4-6% Royalty for the use of the Sir Speedy, Inc. name.
According to Franchise Times, the average Franchise Fee to start a Retail/Specialty Franchise is also $21, 380, but the average Initial Investment is $198,740. Most of the franchisors charge a Royalty of .5-20% for the use of their name and logo.
RadioShack, an electronics store, has almost 2,000 franchises nationwide with a Franchise Fee of $5,000 and an Initial Investment of $55,000. Fortunately, they do not charge a Royalty.
The Athlete's Foot, an athletic footwear company, has only 180 franchises nationwide with a Franchise Fee of $25,000 and an Initial Investment ranging from $175,000 to $300,000. AND a Royalty of 5% for the use of The Athlete's Foot name.
General Nutrition Centers (GNC), a vitamins and health food company, has 1,100 franchises nationwide with a Franchise Fee of $27,500 and an Initial Investment of $135,000. AND a 6% Royalty for the use of the GNC name.
With only a couple hundred dollar investment to start your own MLM business, compared to tens (if not hundreds) of thousands to start a Franchise, which is the better bet? I am not knocking Franchises in any way, I just know that I could never raise the capital necessary to own and operate a Franchise. Especially after doing the research I did for this page. I believe now more than ever that MLM is the ultimate vehicle that can take anyone to financial independence!
