Home-Based Business: Licensed Business Opportunities
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Home-Based Business: Licensed Business Opportunities

If you want to buy a business that you can run from home and that won't cost a bundle, you may want to look into what's called a business opportunity. Just what is business opportunity? Here's a simple analogy.
                             licensed business opportunities

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If you want to buy a business that you can run from home and that won't cost a bundle, you may want to look into what's called a business opportunity. Just what is business opportunity? Here's a simple analogy: Think back to elementary school when your teacher was explaining the difference between a rectangle and a square. A square is also a rectangle, but a rectangle isn't necessarily a square. The same relationship exists among business opportunities, independent businesses for sale, and franchises. All franchises and independent businesses for sale are business opportunities, but not all business opportunities meet the requirements of being a franchise nor are they in the strictest sense of the word independent businesses for sale.

In business opportunity ventures, as in franchises, the seller makes a commitment of continuing involvement with the buyer. So what's the difference between a franchise and a business opportunity venture? As a general rule of thumb, a franchise receives more support from the parent company, gets to use a trademarked name, and is more stringently controlled by the franchisor. Business opportunities, on the other hand, don't receive as much support from the parent company, generally aren't offered the use of a trademarked name, and are independent of the parent company's operational guidelines.

There are numerous forms of business opportunity ventures. Some are turnkey operations similar to package format franchises. These business opportunities provide everything you could possibly need to start a business. They help select site location, provide training, offer support for the licensee's marketing efforts, and supply a complete start-up inventory.

Unlike a package format franchise, however, these types of business opportunity ventures aren't trademarked outlets for the parent company. The company's name, logo, and how it is legally operated are left solely to the licensee. Often, the only binding requirement between the seller and buyer is that inventory is purchased solely through the parent company.

The most common types of business opportunity ventures are discussed:

Licensee

This broad term applies to a host of business arrangements. Under a license agreement, the licenser gives the licensee the right to use the name and trademarks of the business in order to sell goods associated with the licenser. A license can be either limited in its scope or a full franchise agreement.

Distributorship

In this arrangement, an independent agent enters into an agreement to offer and sell a particular product, but is not entitled to use the manufacturer's trade name as part of its own trade name. Depending on the agreement, the distributor may be limited to selling only that company's goods or may have the freedom to market several different product lines or services from various firms.

Rack Jobber

Various companies' products are sold through a distribution system that involves rack jobbers. In a typical rack-jobbing business opportunity, the agent or buyer enters an agreement with the parent company to market its goods to various stores by means of strategically located store racks. Under the agreement, the parent company obtains a number of locations in which the racks are placed on a consignment basis. It is up to the agent to maintain the inventory, move the merchandise around to attract customers, and do the bookkeeping. After an agreed-on interval, the agent presents the store manager with a copy of the inventory control sheet, which indicates how much merchandise was sold. The distributor is paid by the store or location that has the rack - less the store's commission. Rack jobbers might distribute small items like various automotive accessories (such as air freshener), key chains, breath mints, etc.

Wholesaler

A wholesaler is similar to a distributor but does not engage in sales on a retail level. Rather, the wholesaler sells the products of other businesses to retailers and other distributors who have direct interaction with the end user.

Vending Machine Routes

The investment for this type of business opportunity venture is usually greater because the businessperson must buy the machines as well as the merchandise being vended. Although similar to rack jobbing, the situation is reversed in terms of the payment procedure. The vending machine operator must pay the location owner a percentage based on sales. The big secret to any route deal is to get locations in high-foot-traffic areas that are as close to one another as possible. If your locations are spread far apart, you waste time and traveling expense servicing them - and this expense can be the difference between profit and loss.

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