Different types of business opportunities
Here are the most popular types of business opportunities that FTC has identified:
Independent agent who has an agreement to sell the product of another, but does not have the right to use the manufacturer’s trade name. The agreement may limit the distributor to selling the company’s products or allow it to market multiple product lines and services from other firms.
This involves the sale of products from another company through a system of racks that is distributed to various stores. The rack jobber serves as the distributor. The buyer or agent enters into an agreement to market their goods in various stores using strategically placed racks. The racks are consigned to a variety of locations by the parent company. The agent is responsible for maintaining the inventory, moving the merchandise around to draw customers, and doing the bookkeeping. The agent gives the store manager a copy the inventory control sheet that shows how many merchandise was sold. After that, the distributor is paid by either the location or the store which has the rack-less commission.
Vending machine routes.
Similar to rack jobbing. This type of business opportunity venture usually requires a higher investment because the businessperson must purchase the machines and the merchandise. However, the pay process is reversed. The vending machine operator will pay a percentage of the sales to the owner. Route deals are best done in high-traffic areas. You will waste your time and travel expenses if you have locations that are far apart.
There are four additional categories that you should be aware of, in addition to the three business opportunities mentioned above.
A distributor is similar to a dealer, but a distributor can sell to many dealers. However, a dealer will typically only sell to the retailer or consumer.
This arrangement gives the licensee the right to use the trade name of the seller as well as certain methods, technology, or products. The trade name can only be used in an optional manner.
This generic term covers both multilevel marketing and direct sales. You would be a network marketing agent and sell products to your network of friends, neighbours, co-workers, and so forth. You may be able to earn additional commissions by recruiting agents.
This business model is similar to a licensee arrangement. An existing business such as a hardware store or hotel can associate with a larger network business similar to it, often solely for the purpose of advertising and promotion through a common identity.
How the government protects you
Since 1979, the FTC Rule has had an extensive impact on the franchise industry, licensees, and potential franchisees. This rule was created to ensure that all potential buyers of a franchise opportunity or business opportunity will receive full disclosures. It also contains the background information necessary to make informed investment decisions.
Despite the FTC’s rules and the aggressive state action, sellers seek to avoid regulation wherever possible. Fraud cannot be guaranteed by the FTC or state regulations. You should therefore pay particular attention to the FTC disclosure statement.
Franchises vs. business opportunities
A franchisee is generally given more support by the parent company, can use the trademarked name and is subject to stricter control from the franchisor. However, business opportunities don’t get as much support from their parent company and generally don’t have the right to use a trademarked title. They are also not subject to the parent company’s operational guidelines.
There are many types of business opportunities, as we have already noted. Some of these business opportunities are turnkey, similar to many package-format franchises. These business opportunities offer everything you need to start your own business. They assist you in selecting a location and provide training. They also support licensees’ marketing efforts.