If you’re considering buying into an existing business, either as a side project or a new full-time venture that fits around your lifestyle, you might be wondering whether franchising and multilevel marketing (MLM) are the same.
Similarities Between Franchising and Multilevel Marketing:
- Both offer the opportunity to buy into an established brand and access their business model, marketing materials, and stock.
- Both require paying upfront costs to become part of the business.
Key Differences:
With a multilevel marketing business, you often need to purchase a minimum amount of stock each month. Failure to meet this requirement can result in penalties. As a result, MLM participants spend a lot of time using social media and other online platforms to make sales and generate income. Additionally, many MLM companies require agents to recruit more salespeople to the brand.
In contrast, franchising involves buying into an established company, granting you access to its business model, advertising, products, and training. Besides the initial purchase cost, you must also make royalty payments to the brand. Franchises vary widely and can involve selling goods or providing services such as salon services, cleaning, and bookkeeping.
Choosing the Right Path:
While both franchising and MLM offer entry into the world of self-employment, it’s crucial to consider what you want from a business and the level of risk you’re willing to take.
There are many franchise consultants in Canada who can assist with the paperwork needed to join a franchise, including legal and financial aspects. Engaging a consultant early can help you transition into franchising and select the most suitable business venture.
If you opt for multilevel marketing, ensure the company is a legitimate business and not a pyramid scheme, as pyramid schemes are illegal and constitute a criminal offense in Canada.