A Franchise or a Network Marketing Company? – Nigel Mayne Discusses

So for a number of reasons, you are looking for an investment opportunity to add to your income you and your business as opposed to relying on one income stream from a salaried job.   You know you will likely have to borrow to finance not only start up and initial fees costs, but also to cover working capital requirements for some time.  You know you want a proven business. Friends have encouraged you to look at network marketing options, and the very strong brand of a successful franchise system is attractive to you.  So how do you 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, or MLM, is a system of retailing by independent distributors, often in consumers’ homes, and your compensation is a percentage of the sales made by your sales force.  There is often less required for the start up investment, but you have to learn to manage a large network of wholesalers from scratch and develop your own strategy.

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

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

• Be very comfortable that the model suits you.

• Successful franchises are run rigorously.  You run your business with the support of the franchisor.  Your franchisor wants your success. They have the map, the tried and true plan, the "how to" manuals, the expert trainers, the savvy and focussed marketing teams.  You concentrate on operations.  Your focus is clear, so well defined.

• The MLM company will encourage you to find, manage and motivate and pay your own sales force.

• With a franchise model you abide by the contract with your business partner, the franchisor.

• The network marketing model allows you to be more entrepreneurial, more creative which isn’t always a good thing – especially if a proven business plan is the better alternative.

You know enough to understand either of these options won`t get you rich quickly, and there is going to be up to 5 years real and at times scary commitment of capital, energy, time and focus before you can pause and say you have successfully built your business.

There is less risk with the small business franchise model and the rigorously defined focus of the proven franchise success

Whichever you choose, you are going to focus, focus, and focus on the product or service you are marketing.  Your success in business will depend on how much product or service you sell, and how efficiently.  Decide on the business option that best suits you and avoid wasting your time on offers that carry even the faintest taint of con schemes and fraud.

Seek the guidance of franchising broker experts

I founded MatchPoint Franchise Consulting Network in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability.  Its mission included improving the quality of new Franchisees coming into a system.

Advice is offered freely to franchise buyers on the web site and by MatchPoint consultants in the field and is vital to you for a better, prudent, buying decision.  The advice offered by our consultants does not make us lawyers; it is there to help you, 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 in the investment field.  It takes the very few promoters that practice business fraud to taint the dream of an individual and their family.

That's where seeking the independent advice of an expert franchising consultant is wise and invaluable from the start of your due diligence process.

Nigel Mayne on the resilience of the Small Business Franchise

Why a franchise?

It’s a resilient model which has survived three decades of fine tuning in the US and Canada, has gained growing acceptance in the UK and Ireland, Spain, France and Germany, Brazil, Malaysia and Australia.  It is now poised to be recognized for its advantages to both the franchisor and franchisee, in Singapore and Mexico.  The franchise as an investment has remained a strong option throughout the recession that has ravaged many of these countries.

As the advantages have become more widely known to new investors and where the recession has lingered far longer than anyone imagined, there is more competition, more potential franchisees vie for the strongest, established businesses.  This business model allows for a level of transparency which minimizes the risk of either party to the contract failing because of misrepresentation and fraud on the part of the other.

It’s no get rich quick scheme.  Any new venture needs commitment, a strong work ethic, a wise choice of best fit and a little luck!  Your most easily recognizable advantages are the strengths of a particular franchise, name recognition, the level of demand established, the operations already established,  the ongoing marketing support,  the  level of operations training provided.  You won`t be going it alone from scratch.

Many business opportunities for the small business entrepreneur do not provide the level of protection from risk of fraud that governments or the industry mandate for the franchise business through disclosure documentation.  The protection is there for both parties.

Franchise consultants can add a layer of protection for you by finding the best choice of franchise.  Advice will include that you know what you can afford and how much support you need from the franchisor.  Where you are making application for a reputable source of finance, you will be advised to avoid traps by ensuring your representations are truthful- false statements may later be seen as fraud by lenders should your business fail to generate the cash projected.

Choose your small business franchise model and minimize traps, scams and the risk of fraud

I founded MatchPoint Franchise Consulting Network in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability.  Its mission included improving the quality of new Franchisees coming into a system.

Advice is offered freely to franchise buyers on the web site and by MatchPoint consultants in the field and is vital to you for a better, prudent, buying decision.  The advice offered by our consultants does not make us lawyers; it is there to help you, 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 an individual and their family.

That`s where seeking the independent advice of an expert franchising consultant is wise and invaluable from the start of your due diligence process.

Small Business Franchise Success with Fewer Fraud Pitfalls

Starting up in your own business or expanding a home based activity into a reliable and satisfactory income stream is a challenge made tougher by the wide range of opportunities you will find.  Maybe you have already searched the internet for small business opportunities?  Of the many which grab your attention. which ones match your skill set and which are the ones to walk away from for a number of reasons not overlooking the risk of fraud?

Franchises attract many new investors because the business is established and proven, the learning curve for the entrepreneur is minimised and the franchisor resources that come with the package get you off the ground faster.

In your initial search on the Internet you will encounter many leads for a franchise investment, an overwhelming number depending on which country you are focussing your effort.  In the Annual Franchise Development Report produced by a US media group, the internet is the top sales producer, with an increasing amount being spent on advertising franchises using social networking sites. 

The franchise business model is now well established in North America (the USA and Canada), growing fast in the UK, Ireland and Australia in more recent years and now known in many European and South American countries, all with various forms and levels of legislative and administrative controls to protect the buyer/investor from the various possible risks encountered in all business models, including commercial fraud.

Determining what you can afford to lose, some cynics say, will provide you with the short list of potential franchise opportunities.  The well meant advice relates to the hard fact that in the US nearly 90% of all new businesses fail within 3 to 5 years.  The US Dept of Commerce studies show that, on the contrary, over 90% of new franchised businesses are in operation after more than 5 years.

Counter the risks of  small business investment with the protections against fraud offered by the franchise model 

I founded MatchPoint Franchise Consulting Network in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability.  Its mission included improving the quality of new Franchisees coming into a system. 

Advice is offered freely to franchise buyers on the web site and by MatchPoint consultants in the field and is vital to you for a better, prudent, buying decision.  The advice offered by our consultants does not make us lawyers; it is there to help you, 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 an individual and their family. 

That`s where seeking the independent advice of an expert franchising consultant is wise and invaluable from the start of your due diligence process.

Nigel Mayne –Franchising business model offers a greater protection against fraud

Yet another downside to today's tough economic times - you can fall victim to investment fraud in your desire, maybe desperation, to find a new income stream to replace that of your lost employment.

Many business opportunities just don’t provide the level of protection that franchising offers. Consider that today, in many countries, franchising represents a greater protection against fraud due to the consumer protection and disclosure laws that now exist.

Many countries internationally have disclosure laws – the US, Canada, Spain, Mexico, France, Germany, Australia, Malaysia and Brazil to name a few notable examples. Governments have enacted various franchising laws to provide protection to unsuspecting investors falling victim to various forms of commercial fraud.

In the US, as a result of fraud that has been committed over the years in the field of licensing and franchising, federal law is governed by the Federal Trade Commission (FTC) and has established disclosure and franchising laws to protect investors. The recent Amended FTC Rule applies nationally to the offer and sale of franchises and some states have their own additional franchise laws that apply to their state. These laws give protection to franchisees that reside or establish a franchise business in the state. The Franchise Rule protects potential buyers of franchises by giving the material information needed in order to weigh prudently and independently the risks and benefits.

France, Spain, Italy and Belgium have pre-sale disclosure obligations. Australia has a mandatory Franchise Code of Conduct which regulates the contents of agreements. Brazilian franchise law applies in all Brazilian territory.

Be wary and protect your investment in the future against the many and variedforms of commercial fraud. Did you get the message?

I founded MatchPoint Franchise Consulting Network in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability. From its inception it was clear that free advice offered to franchise buyers by MatchPoint is vital to the would be franchisee to enable a better, prudent, buying decision.

MatchPoint consultants trained by Nigel Mayne know the tell-tale signs of fraud in the industry. The advice offered by our consultants does not make us lawyers, but is there to help bring all advice sought by the potential franchisee during the due diligence process to a high level of quality.

The franchising business model offers a greater level of protection against various forms of commercial fraud.

Franchising with Nigel Mayne- A healthy fear of fraud

It’s a sound piece of advice offered freely - the prudent franchise buyer should have a healthy fear of fraud.

Being in business for one’s self has remained an attraction for many throughout this recent long period of companies downsizing, lack of job security and the national unemployment rate at 9.6 percent. Many individuals continue to take control of their destinies and invest in a franchise with a proven model.

Franchisees combine knowledge and resources with entrepreneurial drive and spirit to form a business relationship unique to franchising. Successful franchisees insulate their business and business practices from fraud from the outset.

It’s a mutually beneficial business model, a relationship that provides entrepreneurs with an affordable means of achieving development goals often more quickly and with far less risk. Franchisees gain that head start because of the brand awareness, expertise and support provided by the franchise system.

As with all legally binding contracts, the parties to the franchise contract rely upon the expertise of their legal advisors. Time to ask yourself, does your lawyer know about all the potential for fraud that could exist without a level of due diligence appropriate to this particular agreement?

Prudent franchise buyers take advantage of advice given by expert franchise consultants to supplement their natural caution and protect their investment from the outset and that includes against fraud.

I founded MatchPoint Franchise Consulting Network in 2006 with a mission of helping companies expand their franchise networks and improve their system profitability. From its inception it was clear that free advice offered to franchise buyers by MatchPoint is vital to the would be franchisee to enable a better, prudent, buying decision.

MatchPoint consultants trained by Nigel Mayne know the tell-tale signs of fraud in the industry he advice offered by our consultants does not make us lawyers, but is there to help bring all advice sought by the potential franchisee during the due diligence process to a high level of quality.

Advice sought prudently – Did you get the message?

Taking full advantage of the free advice offered by franchise industry experts may minimize possibilities of fraud arising which will impede success of your new franchise venture from the outset.