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Thinking of starting your own
business this year, but don't want to launch a business
completely from scratch? Then consider a business
opportunity often referred to as a turnkey business. With
a business opportunity package you are purchasing a system
of doing business that often comes with an instructional
manual or a video. There are no royalties to pay but there
are often no support or follow-up opportunities.
Business opportunity
packages are greatly distinguished from franchises. With a
franchise, you are getting involved in a long term
relationship with a franchisee. You are purchasing their
signage, logos, uniforms, and systems of doing business.
There is no originality that you can bring to the
business. You must support the proven franchised system of
doing business.
There are fundamental
differences between a business opportunity and a
franchise. A franchised business is based on a proven
method of doing business. Most often, franchised
businesses are "look-a-like" businesses, meaning
that signage, outfits, offerings, menu, vans, logos, etc.
are identical. When you pay the franchise fee, you are
purchasing the rights to use these clearly identified
logos and business symbols from that particular franchise
corporation.
In order to run the
franchise, you must follow the rules and regulations as
set forward by the franchisor. They will want you to
attend training classes, perhaps attend an annual
convention, and will want to make sure you keep up with
their standards. According to the International Franchise
Association, you are in business for yourself, but not buy
yourself.
Many entrepreneurs like the
idea of purchasing this proven system of doing business.
The franchisor will even help pick the site and will help
design the store, the restaurant or office center.
You will be required to pay
royalties every year to keep your franchise operation. The
royalty fees go to a national advertising fund and also to
a general fund to keep the franchsor operating at a
profit.
The Business Opportunity
When you purchase a
"business opportunity" package you needn't
answer to anyone. You are purchasing instructions or some
materials to conduct this business, but you are not
purchasing a set of rules and regulations that you must
follow to the letter.
Often, business opportunity
packages are called "turnkey operations." The
theory is that all you have to do is to launch the
business opportunity is buy the package, read the
material, study the manual or video, "turn the
key" and open your business. Some of these start-up
business opportunity packages cost $100 or less. Others
cost thousands of dollars. But there is one common
denominator: the opportunity should be investigated.
Remember, let the buyer beware. There are several ways to
investigate a business opportunity.
. 1. Call telephone
information for the city in which the company is based and
ask for the number of the local Better Business Bureau
(BBB). Call the BBB and ask if they have a
"reliability report" filed on the company. This
report provides information on the company and will
include whether or not complaints have been filed on the
company. It will also let you know how the company handled
those complaints. Also try calling the National Fraud
Information Center at 800-876-7060 and the Call for Action
Hotline at 301-652-HELP.
. 2. Call the Chamber of
Commerce in the town where the company is based. Just
because the company might not be a member doesn't mean
they aren't reputable. But ask the Chamber of Commerce if
they know of any reason why someone shouldn't do business
with them. It doesn't hurt to hear what the word of mouth
is about a particular enterprise.
. 3. Call the Attorney
General's office in your state--often located in the State
Capitol's office. Also check with the Secretary of State's
office to see if there are any complaints filed on the
company or if there are investigations pending.
. 4. Where did you hear
about the business opportunity? At a local trade show?
Through an ad? If it's in an ad, call the magazine who
carried the ad and ask to speak to the advertising
department. Do they have information on the company? How
long have they been in business? Do they pay their bills
on time? Has the magazine or trade sponsor received any
complaints about the company?
. 5. Use your judgment. As
you study the ad, ask yourself, "can I figure out
what the business opportunity is from this ad?" If
not, then run in the other direction. They are trying to
be evasive. If you can't contact the company and get more
information on what it is you are sending money to
receive, then don't send a dime. Remember the old line, if
it sounds too good to be true, it probably is! Not in
every case, but in many.
. 6. Ask the company
offering the business opportunity package if you can get a
list of folks who invested in the package during the last
two years. If they are legit, and if they are proud of
what they are offering, they will be happy to put you in
touch with their satisfied customers. If they won't do
this, there very likely is something shady going on with
that particular business opportunity program.
. 7. Companies that have a
legitimate business opportunity package for you to look
over--and we feature many of them in this magazine--should
not be scared or dismayed if you want to receive some free
additional information about the company before you invest
in the program. This is a perfectly acceptable request.
. 8. The Federal Trade
Commission offers a free package of information about the
FTC Franchise and Business Opportunity Rule. Write to:
Public Reference Branch, Federal Trade Commission,
Washington, DC 20580 or call the FTC at 202-326-2222.
. 9. Use your instincts. If
the opportunity doesn't sound or seem just right to you,
stay away. Do some more research before you get involved
with the company and follow tips one through 8 to conduct
your due diligence investigation about the business and
the specific opportunity.
. 10. Don't send money
unless you completely understand what you are buying into,
and even then, check it out before you send any money.
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