Consider affiliate marketing before buying a franchise business

Buying a franchise has long been an attractive way to start a business. Using the brand recognition and experience of an established company can be very comforting to new business owners. However, with the ascendancy of the internet, starting an affiliate marketing business online is giving franchisees, and home-based franchises in particular, a run for the money.

What exactly is affiliate marketing? Affiliate merchants sell products and services that are owned by others and receive a commission when a sale is made. Usually, the website, shipping, customer service and other business functions are provided by the product owner, which makes it very easy for a person to make money online immediately and get into the business without a huge investment. Affiliates sell everything from brand-name durable goods like electronics and tools to software and other digital goods.

Let’s look at some of the advantages of affiliate marketing over buying a franchise, even if you’re considering a home-based franchise opportunity.

The first and most important thing is the cost. Franchises can be very expensive. The International Franchise Association (IFA) reports that 20% of franchises have startup costs of more than $250,000 and 54% require startup investments of more than $100,000. Many well-known franchises cost more than $1 million to start, plus real estate.

Startup costs for an affiliate marketing business, on the other hand, can be minimal. Expert advice, tools, software, and advertising can be had for less than $10,000, sometimes considerably less. Many people have started successful affiliate businesses for less than $1000, although it typically takes longer to achieve a consistent level of success the less capital you have.

Once you make the substantial investment to buy a franchise, it usually takes a long time to turn a profit. With fast food franchises, for example, it takes up to 5 years to get out of the red. However, with the right affiliate marketing training, you can make a profit very quickly.

Many people invest in franchises to give them a sense of security when starting their own business or even buying an independent business. However, one study showed that over a four-year period, franchises were almost twice as likely to fail as small independent businesses that had been bought (not started) by their owners. Many affiliate marketing businesses fail too, but failure isn’t as painful or costly as it is with a franchise.

Finally, there is the question of freedom. Even in a home-based franchise opportunity, franchisors may require you to follow their operations manuals to the letter. You are also entering a legally binding long-term relationship, and it can be extremely difficult to obtain a “divorce.” However, with an affiliate marketing business, you have all the freedom in the world. You are free to sell any product you choose to whomever you choose by any means you choose.