Are There Alternatives to Franchising?

Although we hear so much about franchising in today's business community, businesses actually have several ways to expand their marketing distribution channels. Franchising is just one method, albeit a solid and successful one, of expansion and some business, because of the nature of their services, choose other alternatives to franchising.

Distributorships

Distributorships offer a strong alternative to franchising and may be preferable for some business owners. Distributorship owners have the following advantages:

• One-on-one contractual relationship with suppliers of their choice
• Opportunities to buy in bulk from suppliers
• Opportunities to do business with companies of their choice, rather than being limited to a certain network

Likewise, there are disadvantages to distributorships as well. One of the biggest disadvantages is that distributorship owners usually don't receive the training and full-time operational support that franchise owners usually receive.

Some examples of popular nationwide distributorships include Amway, Mountain Life Spring Water and vending businesses such as Campbell's Soup and Knorr Soup vending machines.

Licensing Ownerships

As a licensee owner, you'll pay for the rights to use a company's trademark and branding. Otherwise, corporate licensors have no control over the operations of your business; they're primarily concerned with supervising the branding and collecting royalties on the use of the license.

If you prefer running your own business independently without corporate supervision of your operational procedures, there are advantages to being a licensee. As a licensee owner, however, you won't be able to avail yourself of support, training or any of the other operational advantages offered by franchise companies. Here are some of the advantages of being a licensee:

• You'll have the opportunity to implement your own operational procedures
• You can choose your own suppliers
• You can choose your own locations and markets
• You can run your business almost completely on an independent basis

Some examples of popular licensors include Apple Computer, Woolmark, Canon Inc. and Netscape Communications

Whether you decide on becoming a licensee, distributor or a franchisee depends largely upon the type of business you want to run, the way you want to run it and the industry that most interests you. For more information about franchisee, licensee and distributorship opportunities, you can contact your local branch of the Small Business Administration, or you can search online for franchise opportunities in your area.