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Guide to choosing between franchise, catalog sales, and other business programs

August 11, 2020

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There is a popular phrase that says, “Don’t run before you go.” Translated into the business world, it would say: “Not without a prior commitment know and examine”. And in order to trade from a branded hand (concept known as “turnkey”) you must first understand how the business scheme works to see if it adapts to your profile, tastes, personality and pocket. Because being in direct contact with customers is not the same as serving them online, having a set schedule for work in your free time, or being a professional as a student.

Guide to choosing between franchise, catalog sales, and other business programsGuide to choosing between franchise, catalog sales, and other business programs

For this reason, we introduce each of the “turnkey” models below so that you know the main features, pros and cons, the level of brand involvement and other elements that will help you determine which one is best for you.

1. Distribution

They act as an intermediary between a brand and the end user and ship the goods via a commercial building, home delivery or e-commerce.

Advantages. You receive a commission for every sale. You have the freedom to start and manage your business as the brand owner won’t be your boss.
disadvantage Unlike franchises, certain distribution models allow you to use any name for your business and they do not provide technical support.
Investment. Keep in mind that you may need a location to sell the products, which would increase your investment.
Relationship. Stay in touch with your dealer to avoid running out of stock and with your customers to replenish it.

2. Franchise

The franchisor (trademark owner) grants the franchisee (you) the right to use the trademark of their product or service.

Advantages. You don’t always need prior knowledge as the manuals contain all the administrative and operational information necessary to make your business a success.
disadvantage The franchisor will make sure that you follow the established rules and there may even be penalties for violations.
Investment. Remodeling of the premises, inventory, furniture and equipment; In addition to license fees, franchise fee, and contribution to the network’s advertising fund (not in all cases).
Relationship. You become the brand’s franchisee for a period of time.

3. License

Permission granted by contract to reproduce, use, and use any trademark, image, logo, concept, or fictional character with intellectual property rights.

Advantages. You can take advantage of a brand on almost any product, from a shirt or hat to a toy or school supplies.
disadvantage You need to have the resources (finance, human resources and machinery) to develop the business, good sales capacity, and high quality products.
Investment. You have to pay royalties to use the brand and invest in the items in which you embody the license.
Relationship. The licensor (owner) grants the licensee (you) permission to use his trademark for a certain period of time.

4. Machines sale

The machines take up little space to stand and can sell a wide variety of products. Location is key so look for a colorful place with a high influx of pedestrians.

Advantages. They are up and running around the clock so you can generate income anytime. And you just have to keep them in stock and maintain them weekly or monthly.
disadvantage The company that sells the machines to you could also be your supplier, and consequently you need to buy the products that are sold in them.
Investment. It is not enough to have one vending machine, most sales contractors have more than 50 units. Depending on where they are, you will have to pay a rent and an electricity fee.
Relationship. The machine manufacturer supplies you with spare parts and accessories.

They’re up and running 24/7 so you can start earning anytime / Image: Jesse Chan via Unsplash

5. multilevel

Direct sales profit system based on the sale of one brand’s products in which you create a distribution network to which you invite your acquaintances to participate and who in turn appeal to more people.

Advantages. You get income from all members who join: more members = more profit. You can also get incentives like discounts, trips, and even cars or houses.
disadvantage If you don’t have self-discipline or good time management and don’t support your sales network, your business can suffer.
Investment. Most of the entrance fees are low or even zero.
Relationship. The gift of people is imperative so you need to know how to interact with potential consumers and sellers.

6. Representation

Promotion of products or services of the brand that you represent in your customer portfolio with the help of the sales material provided by the company.

Advantages. You can be the exclusive agent in a geographic area to reduce competitive risk. In this case this must be stated in the contract.
disadvantage If the brand is not well known or there is no advertising, use your creativity to get the offer you are representing.
Investment. It depends on the terms of purchase and sale set by the owner of the brand.
Relationship. As an agent, you act as an intermediary between a buyer and a seller, promoting a particular company’s product or service.

7. Sale of supplies

The company acts as a material supplier for you to make a product for your own account and brand. You have to develop your business from scratch, but in return you get independence and creative freedom.

Advantages. Independence and creative freedom.
disadvantage You have to develop your business from scratch.
Investment. Variable depending on the type of inputs and the amount you need. You have to constantly replenish raw material to keep your production going.
Relationship. The company only acts as a supplier.

8. Catalog sales

Your job is to get the catalog into circulation to take orders from potential customers and you will earn according to the difference between the manufacturing cost and the price paid by the end user.

Advantages. You can get a special membership or wholesale price.
disadvantage To increase your sales level, you need to buy more than one copy. And because of the constant inventory turnover, you have to regularly invest in new molds.
Investment. Usually you only invest in the purchase of the catalog. Some systems even process them online, which eliminates the costs.
Relationship. Who you should be more in touch with is with your customers to keep them updated on new products and to place orders with each new catalog.

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