How Franchising Offers Global Customer Base

It is a well known practice in business that networking is the most efficient means of gathering resources. Whether it be for information or in some instances help in difficult situations, networking became the buzzword of most businesses long before the growth of the internet and global communications. The idea of getting to know others in similar business positions allowed companies to position themselves to offer services to others in their network, expecting them to return the favor when they needed the services offered by their business.

Another method of expanding their presence and sales used prior to the internet was franchising. A person wanting to run his or her own business, but lacking a business plan or even a viable product, could open a branch of an already successful business and become an owner almost overnight. Using the companies experience, product and established name recognition, they could quickly build their own business. They paid, sometime dearly for the use of the company name a business model, but they usually ran a successful operation.

Most pre-internet opportunities were limited by geography and when a person bought into a franchise they were guaranteed a prescribed market and guaranteed limited local competition from the same company. Once the internet grew, offers to open franchises exploded with its growth, and the issue of a protected market was quickly dismissed. Building a global marketing network became the rage and today it remains the goal of many businesses as well as opportunity seekers.

No longer do people have to get out of the house to run their business and many have made a success at offering the sale of products and services online. To increase their sales they simply sold franchises who would advertise on their own to bring potential customers to their unique company web site. Of course, like the brick and mortar franchises they would pay an initial fee to use the company services and name as well as an ongoing fee to continue using the company resources.

Still, with no protected territory the new business owners had little worry since the entire globe was their open territory. They could market online to a global customer base and when the opportunity to recruit others to distribute the product and receive a piece of their sales action, a few decided that it is easier to sit back and collect an income off the work of others, and shifted their focus to recruiting distributors instead of selling on their own. Additionally, they could urge their distributors to recruit more distributors to sell more product and receive a commission on their sales as well.

With each successive level of distributorship the sales commission would be less, but the focus was to bring in as many distributors as possible, rationalizing that if 1,000 distributors made sales providing the first guy on the list a nickel, they made $50 for doing nothing. Being able to use the internet to reach the global audience, new distributors and new sales will quickly produce more profit and using a global marketing network, their payback is increased income.