Start-up Costs A Comparison of Franchise Costs vs.

Network Marketing
Business owners know and understand the expense in running a traditional business
with inventory overhead, employees, insurance, utilities, government regulations and
many other cost factors just to open the door and turn on the lights each day to market
their products or services. For this reason, many traditional business owners also work
a network marketing business in conjunction with their business or on a part-time basis.
Few traditional business offers the ‘time freedom’ provided by a profitable network
marketing business. Whether operated on a part-time or full time basis, the network
marketing distribution model avoids many cost factors involved with traditional business.
Bottom line, a person can start a network marketing business at a fraction of the cost of
beginning a traditional business or franchise. The ongoing monthly expense to run the
network marketing business is also a fraction of the cost of a traditional brick and mortar
business or franchise because it can be run out of a residence – giving the networker tax
advantages and write offs that will benefit them no matter how successful they become.
There are pitfalls, of course, to any start-up business. For a person who has never run their
own business before, both the franchise model and network marketing distribution models
offer some distinct advantages. First, the person can research the companies and products
with which they want to engage. Both franchise models and network marketing companies
offer important basics to offer entrepreneurs their best chance for success, which includes
training, support, quality products, a proven track record and mentoring coaches.
Let’s begin by looking at the start-up costs involved with some of the most popular
franchise opportunities available to you, today in North America. The following two lists
are taken from a recent issue of “Entrepreneur” magazine.
2009 Top 10 Franchises
America's top franchises from Entrepreneur's Franchise 500
1. Subway Startup costs: $78,600 to $238,300 Franchise fee: $15K
Ongoing royalty fee: 8% Term of agreement: 20 years, renewable

2. McDonald's Startup costs: $950,200 to $1.8 million Franchise fee: $45K

Term of agreement: 20 years, renewable

3. Liberty Tax Service Startup costs: $53,800 to $66,900 Franchise fee: $40K
Ongoing royalty fee: Varies Term of agreement: Perpetual, renewable

4. Sonic Drive In Restaurants Startup costs: $1.2 million to 3.2 million Franchise fee: $45K
Ongoing royalty fee: 1-5% Term of agreement: 20 years, renewable

5. InterContinental Hotels Grp Startup costs: Varies Franchise fee: Varies

Ongoing royalty fee: 5% Term of agreement: 10 years (avg), renewable

6. Ace Hardware Corp. Startup costs: $243,500 to $1 million Franchise fee: $5K app fee
Term of agreement not renewable

7. Pizza Hut Startup costs: $638,000 to 2.97 million Franchise fee: $25K
Ongoing royalty fee: 6% Term of agreement: Not renewable

8. UPS Store/Mail Boxes Etc. Startup costs: $171,200 to $280,000 Franchise fee: $29.95K
Ongoing royalty fee: 5% Term of agreement: 10 years, renewable

9. Circle K Startup costs: $161,000 to $1.4 million Franchise fee: $15K

Ongoing royalty fee: 4% Term of agreement: 10 years, renewable

10. Papa John's Int'l. Inc. Startup costs: $135,800 to $491,600 Franchise fee: $25K
Ongoing royalty fee: 5% Term of agreement: 10 years, renewable

The list on the next page from “Entrepreneur” magazine is the “Top 10 Low Cost Franchises for 2009”

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 Top 10 Low Cost Franchises for 2009
1. Instant Tax Service Total investment: $39K-89K Franchise fee: $34K
Ongoing royalty fee: 20% Term of agreement: 5 years, renewable

2. Jani-King Total investment: $11.4K-35.1K+ Franchise fee: $8.6K-16.3K+

Ongoing royalty fee: 10% Term of agreement: 20 years, renewable

3. Jan-Pro Franchising Int'l. Inc. Total investment: $3.3K-54.3K Franchise fee: $2.8K-44K
Ongoing royalty fee: 10% Term of agreement: 10 years, renewable

4. Kumon Math & Reading Ctr Total investment: $30.96K-129.4K Franchise fee: $1K
Ongoing royalty: $32-36/student/mo. Term of agreement: 2 years, renewable

5. ServiceMaster Clean Total investment: $21.2K-126K Franchise fee: $16.9K-54K

Ongoing royalty fee: 4-7% Term of agreement: 5 years, renewable

6. Merle Norman Cosmetics Total investment: $33.3K-168.7K Franchise fee: $0

Term of agreement: Open-ended

7. Stratus Building Solutions Total investment: $3.5K-57.8K Franchise fee: $3K-47K

Ongoing royalty fee: 5% Term of agreement not renewable

8. Jazzercise Inc. Total investment: $2.98K-38.4K Franchise fee: $500/1K

Ongoing royalty fee: 20% Term of agreement: 5 years, renewable

9. Vanguard Cleaning Systems Total investment: $8.2K-38.1K Franchise fee: $7.7K-37K

Ongoing royalty fee: 5% Term of agreement: 10 years, renewable

10. RE/MAX Int'l. Inc. Total investment: $35K-200K Franchise fee: $12K-25K
Ongoing royalty fee: Varies Term of agreement: 5 years, renewable

OK, whip out your checkbook… right? Well, not hardly, because the costs you see above
are only the rights to market that brand name, it’s products and / or services. For instance,
take a look at the Jazzercise “Total Investment” and the relatively low franchise fee of only
$500 to $1,000. Where will you hold your classes? Most franchisees lease space in strip
centers and incur many other expenses not mentioned here, such as utility costs, exercise
mats, music system, stair steps and more. Then after all your monthly expenses you incur,
you have a 10-year commitment to pay Jazzercise 20 cents of each dollar you earn. Nice!
Notice the “TIME” commitment for these franchise contracts! You better be pretty doggone
serious about a business before signing on the dotted line with any franchise opportunity.
Now, let’s look at the start-up expense for a reputable network marketing businesses with
which many people earn much more money than a franchise and without the contractual
requirements of time and money. And without the headaches of dealing with employees.
First, you should never have to pay more than $500 to market any product or service.
Think about it. Why should you pay a company a large fee to market their products so
both you and the company will profit. Granted, companies do have marketing expenses
and product development costs to cover, but that is “their” traditional business costs and
should be recovered over time and not by charging you with an exorbitant distributor fee.
If a company has a large enrollment fee like $400 to $500 or more, you should ask where
the fee is going. More often than not, these high enrollment fees are being used to pay
enrollment bonuses, and that borders on being fraudulent. Companies cover this practice
by saying it is a finder’s fee or a “training” bonus. If you invest $300 to $500 in ANY
company to get started, then you also should be getting, at least, $200 to $400 of product
for your personal use or for marketing or selling to others for a retail or wholesale profit.
There are proven companies with excellent management, great track records and exclusive
patented products that will set you up in business for under $50. This cost is synonymous
to a “franchise fee” and gives you the right to market the company’s products and services.
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The best companies in the marketplace today offer new distributors several options as to
how they want to run “their” home-based businesses. This usually involves a product or
service package that is deeply discounted to the new “independent representative. These
discounted packages often give distributors enough product to create their first customers,
or to, at least, provide a sampling of product for personal use and sharing among family,
friends and business associates.
Best of all, unlike a franchise, there are NO ongoing “royalty fees” to pay to a legitimate
network marketing company with your profits. Although, as with any business, you will have
some necessary marketing expenses to conduct your business in a professional manner.
Most companies offer sales aids and marketing tools at a deeply discounted rate and these
are usually provided to cover the companies’ cost of producing, manufacturing or printing
the material for its distributors. For instance, if you have to pay more than $2.00 for a CD
or DVD about a company or it’s products and services, then the company is most likely
using the marketing material as a profit center. This usually indicates that the products or
services of the company are not pulling their weight, so the company is tapping into its
distributor base to stay afloat… not a good sign for you or the company.
It helps to know your market and have a passion to help others succeed. You can learn
marketing skills over time. There is a truism in sales and marketing that goes like this:
“People don’t care how much you know… until, they know how much you care.”
Be passionate about whatever product or service you decide to offer in the marketplace.
Believe in it. Read and begin to gain more knowledge about your products or services.
Become an expert. This takes time, but will allow you to help many others who use your
product or service. Over time, you will become the trainer and mentor for those who join
your team. This is a team effort, no doubt… Together, Everyone Achieves More.
My mentor, Jim Rohn, says “You have to work harder on yourself, than you do on your
job.” That is great advice for anyone who wants to break free from the chains of working for
someone and who plans to develop their own, profitable business. It is within all our grasps.
Since I first entered into my first network marketing company in 1985, I have earned
millions of dollars in commission and overrides from just the two companies with which I
have worked as an independent marketing representative. I have learned much from my
coaches and mentors along the way. Now, I have a tremendous opportunity to assist many
new and motivated entrepreneurs gain the time freedom and monetary success that I have
enjoyed over the years. I believe I can help you avoid many mistakes that I have made.
So, if you are willing to make a time commitment and modest investment into your future
growth as a person and entrepreneur, then please contact me or my business partner,
Gayle D’Haeseleer, and let’s talk about your options and what it takes to succeed.
Our team is involved with an innovative “A”-rated company and we represent the fastest-
growing team in N America. We welcome motivated people to join us, so call with questions
you may have about building a profitable business with a dedicated, winning team.
To Your Success,
Kevin Venner Cell #: 214-868-4800 kevin@maxachiever.com www.MaxAchiever.com

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Gayle D’Haeseleer Cell #: 772-473-3394 gayle@maxachiever.com Copyright © 2009
MaxAchiever LLC

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