What Is a Business Opportunity or 'Biz-Op'?

Generally a Biz-op falls into one of three concepts: distributorship, routing or licensing.

A distributorship is where the purchasers buys territory in which they have the right to sell the company's products.  The purchased territory may or may not be an exclusive territory.

A routing concept is just as it sounds.  The purchaser buys a route from the company to restock shelves or vending machines with the company's products.

A licensing concept is where the purchaser buys limited rights to use proprietary data, technology or trademarks from the company from which products or services can be offered to the public.

So what's the difference between a Biz-op and a franchise relationship?  In a Biz-op the most important element is the product itself.  While in a franchise, the most important element is the process.  For example, a muffler franchise would be built around the brand, facility, guarantees, customer service process, etc.  In a muffler biz-op, the muffler is the primary element in the relationship.  Another major distinction is that the biz op owner generally does not use the company's name or logo in identifying their business as they would in a franchise.

Other considerations:

• Support - A biz-op generally does not provide on-going support and training where a franchise focuses a lot of effort and resources on marketing and support
• Exclusivity -  A biz-op typically handles a variety of different products and services where a franchise is more focused on specific products and services licensed in the franchise agreement
• Fees - A biz-op company drives most of their revenue from the sale of their products, they typically don't charge an on-going royalty payment.  Where a franchise company typically charges a royalty for the use of their systems and support.
• Cost - A biz-op generally have a lower initial cost than a franchise.  Many biz-ops are targeted for home-based, part-time or second income businesses.

So when considering a biz-op or a franchise, understand that the biz-op generally does not provide the management systems, training, ongoing support, marketing and other support services that are the hallmark of most franchise relationships.  Therefore if the business model is very simple (you don't need a lot of on-going support), you are a true entrepreneur, and you have less money to invest; a biz-op may be an good fit for you.