Turn Key Biz Opportunity VS Traditional Franchise

This really has not been a big topic of discussion in the past as the phrase “Turn Key” used to relate to the franchise business only. Only in the last 5 years has turn key business opportunity’s become a major competitor to franchise ownership. But really, what’s the difference? Well the most obvious difference is in the price to get started. Typically franchise business startups, cost more to get involved in, whereas the turnkey system is a bit less expensive. Franchises take a little longer to get started (usually months) and turnkeys can be rolled out very quickly (days our hours in some cases).

Franchise openings are much like closing on an expensive piece of property with lawyers involved and boiler-plate language with page after page of contracts. Turnkey opportunities can usually be agreed in writing with a few pages and less legal issues (or no attorney fees). Some often have agreed language when the purchase is made like on the receipt or posted on their websites. So which is better? Who reigns supreme? Well let’s discuss a little bit more before those questions are answered.

The way I like to look at the difference between a franchise and turnkey opportunity is like David and Goliath! With David being turn-key and Goliath being franchise business. Or maybe a better way to look at it is in terms of established investment –vs- risky investment. The franchise would be more like a company that has a track record and is profitable although the only way they are profitable is through their network of franchises. The turnkey business opportunity is more like a company with great vision, younger in life and ready to seek VC funds for the next step in building their model, again the only way they are profitable is through their network of partners.

Similarities you ask? Yes they both have some similarities. Both rely on outside funding and operational help to fuel revenue. The outside funding comes from you the potential franchisee or partner. Your success is their success. They both have agreements in place and provide support for their investors (franchisees and partners). Both will provide training and some will even offer incentives (like free leads, discounts on services, accounting support, etc). So who is the big winner? Which is the model investment for an aspiring entrepreneur? Please tell me please!

Well my rule of thumb for an entrepreneur looking for a solid future investment in another firms products or service is to look for future growth and expansion opportunities. What is it that you want to accomplish as an entrepreneur? Most franchises have limitations on what you can do as far as putting your own outside the box creative thinking into the business. A franchise: it is what it is, but that’s not to say that you cannot be successful. For the most part franchises (well established ones) are safer as far as return on investment – it just takes longer to be profitable. You know that Subway is not going to go under and people will walk in everyday and buy the sandwiches. A turnkey opportunity is a lower cost / high risk investment that you can usually be more creative with.

They usually call for low or no overhead (operating expense) and the entrepreneur can come up with cost effective and creative ways to market and sell their systems. Turnkey business opportunities are frowned on by the public and institutional investing community, however for creative and passionate entrepreneurs – they welcome those naysayers and they usually desire to prove them wrong! “Bring the frowns on Mr. Stuffy Wall St. guy, but I own 25 small turnkey businesses that generate an annual gross revenue of $600k”…. is what most turnkey business owners and entrepreneurs want to say! That is the one advantage for an entrepreneur if they choose turnkey solutions – they can (and most do) afford to invest in multiple business ownership. Yes, franchise owners can do the same but at a much greater investment price.

So to wrap it all up – in this author’s opinion is “if you are a beaming entrepreneur or entrepreneur to be, why not try out some low cost turnkey business opportunities first, this will give you greater experience if you have limited business knowledge, it allows you to be extremely flexible and creative in your marketing and sales approach, and offers just as much profit potential as well established franchised businesses”. There is a new opportunity recently created called the independent training distributor program exclusively offered by the authors company.

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All About Franchise

Franchise according to the dictionary means Granting authorization to someone to sell or distribute a company’s goods or services in a certain area or certain places.

Franchise is a license granted by a company or firm on certain terms and conditions to an individual or firm to operate a retail outlet in a specified area or place. The company or firm which grants the license is called as franchisor, where as, the individual who accepts the terms and conditions to operate a retail outlet is called as franchisee. Here the franchisee agrees to use the franchisors brand name, products, services, promotions, selling methods, add display and distributions on certain terms and conditions. The franchisee pays a fee to the franchisor for the license to sell its products, services or goods.

This type agreement helps both parties, the franchisor gets new area to establish business where as the franchisee will get already developed brand products and having no guess work about what to do, because all development and decisions are made by franchisor and everything is laid out, step by step, with nothing missing or left to chance and it all works with precision.

The Legal Aspects of Franchising

In legal terms franchise is a contract. The franchisee is usually granted an exclusive territory in which he or she is the only distributor of the particular products or services in a specified place. The franchisor is obligated to assist the franchisee through advertising, promotion, research and development, quantity purchasing, training and education etc.

In 1979 the United States legislature had enacted the laws to protect prospective franchisees from being deceived by the falsehoods of franchisors. The franchisor has to disclose all financial details such as profit, operating cost, recurring expenses and five year actual sales statement and these laws are known as financial discloser law.

A franchisor also has to disclose the background of the company including the business experience of its high level executives and whether any of its executives, within the last seven years, have been convicted of a felony or involved in litigation franchise business fraud, or have been involved in any proceedings for bankruptcy. In addition to this disclosure factual description of the franchise and statement of the total funds to be paid such as initial franchise fees, deposits, down payments, prepaid rent, and inventory purchases is mandatory. Conditions must also be clear on recurring costs such as royalties, rent, advertising fees etc.

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Is a Franchise Your Ticket to Success?

So you want to own your own business. I think that is a wonderful idea and applaud you for taking a step towards being your own boss. But I ask you, have you weighed the different possibilities?

Traditional business models and franchises can produce a significant profit for those owning them. Unfortunately, it usually takes several years before you see any profits. If you last that long. Most new businesses only last a few years and never reach the profit stage. That is a few years of your life that you have now wasted. So what are the alternatives if you want time freedom and financial independence? Few people know of the advantages of the new internet business model.

Lets take a moment to compare the two side by side. Here is the breakdown:

Franchise and Traditional Business Models

-Investment of $100,000 to $2,500,00

-Five years until profit

-15% profit or less

-16 hour work days as owner

-$40k typical owner annual salary

-Employees – often teenagers

New Internet Business Model

-Investment of $2,500 to $25,000

-Fifteen DAYS until profit

-75% profit or more

-3 hour work days as owner

-$250k+ owner annual salary

-No employees

While these are all impressive statistics, there are also some other benefits to the new internet business model. With traditional business models and franchises you will have daily inventory, expensive rent, pricey insurance, more taxes, and less time freedom. With the new internet business model, you have no inventory, no rent, no insurance, less taxes, and more time freedom to do the things you really want to be doing.

The days of trading time for money as an owner or employee are over. With the new internet business model you can leverage your time, money, and yourself to getting the success you deserve. No more driving in rush hour traffic. No more working at a job you hate doing. No more working when someone else tells you to. It is time to make that decision to become financially independent and have the time freedom you desire. The only thing stopping your success? YOU! Make the change that will change your life.

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