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What’s the difference between a business format franchise and a business opportunity?
Neither terms have a clear definition, but the essential elements of business format franchising are as follows: > The franchisor allows the franchisee to use the name that is associated with the franchisor. > The franchisor exercises continuing control over the franchisee. > The franchisor provides assistance to the franchisee. > The franchisee has periodically to make payments to the franchisor. Very often, a business opportunity has all or a majority of these elements, but the big difference between a business format franchise and a business opportunity is that the former has been pilot tested, so that the franchisor is in a position to prove the system has been tested in the field. Business opportunities, on the other hand, are precisely that. In other words, they are an opportunity, but not a system that has been proven. Any business can come up with an idea and seek to allow others to use that idea. That is a business opportunity. Some business opportunities turn out to be successful, but the percentage of business format franchises that are successful is hugely higher, simply because they have been proven to work.
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