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How Network Marketing Real Estate and Franchising Are Similar
Welcome to the Street Smart Wealth Podcast, show #101.
Sometimes new people can struggle with how to explain what network marketing is, or whether it is really a legitimate business model. And, of course we know it IS, I mean, even Warren Buffett is in the game, owning several Direct Sales companies under his investment umbrella and he calls it one of the best investments he’s ever made!
On today’s show, I want to share some thoughts on how Network Marketing stacks up to Real Estate and Franchising and give you some language you can use that just plain makes sense.
Are you looking for coaching to be successful in your Network Marketing business? Want to also learn how to generate your own leads online? My Inner Circle Coaching Program may be just what you need. Learn more at – JackieUlmer.com/coach
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Franchises, Real Estate and Network Marketing similarities
I have had a lot of team partners ask me – how do I explain what we do? What network marketing IS?
Good question because sometimes people really don’t get it, or they’ve had a negative experience or heard someone mention – pyramid.
I’ll share more about pyramids in a minute.
When my husband and I were researching ways to diversity our income, outside of the airline industry and something I could do while still being a full tine mom, we seriously considered franchising . It sure look like an option that might provide what we were looking for in terms of securing our retirement and finances.
Since I was extremely skeptical about Network Marketing, and still came into it somewhat kicking and screaming, we were not even SORT OF open to looking at it as a serious option or career profession.
Keep this in mind when someone tells you no! People DO change!
As part of our research, we toured the country and visited 3 different franchise headquarters. A few things were always a deterrent to actually jumping in –
1. Start Up costs – it takes a LOT of money, and they are very upfront about the amount of time before you see a return on investment
2. Additional money needed to sustain while in growth mode
3. Time requirement, given that we had not yet started a family
As time went by, and we started our family, we became educated and open to the idea of Network Marketing and jumped in with both feet, never looking back!
Now, it’s been over 20 years since we’ve had a successful network marketing business and I am so grateful for what I have learned and the income I have made.
And, I do like the share the comparison of Network Marketing and franchising. Both have a parent company that provides support, training and essentially a “licensing right” to use their name.
With both, it offers a turn key system and if you will just FOLLOW the system, you can’t fail. Even with network marketing.
Whenever I am talking to someone interested in my business and they tell me how they have “tried” other network marketing businesses without success, I ask deeper questions, and most specifically want to get to exactly what action steps they have taken.
Usually, they have talked to less than 6 people before they quit and yet I hear “Everyone I talked to was not interested. “ Here is what I know – the first 6 people I talked to weren’t interested either. I just kept going. I’m not going to hang the hat of my success on just 6 other people, who have things going on in their lives and between their ears that make them not right for my business!
This alone is one of the most powerful things about network marketing and Robert Kiyosaki outlines it in his book – The Business For People Who Like Helping People – He says –
Network Marketing is a great business model to teach people the business skills they need to be successful.
We recently stopped in a coffee shop in Orange County and I noticed a brochure promoting the franchising opportunity associated with the store so I picked it up.
As we read over it, we had to laugh at what was required, vs what has been required of us to build a network marketing business to a level that essentially offers much more in terms of both income and free time.
Here is what the brochure listed, with my network marketing comparisons listed in parenthesis –
Own Your Own Franchise –
Single or Multiple Stores (wow, I have thousands of “stores” with my networking business) Proven Business System (same with Network Marketing)
High Repeat Customer Base (we have thousands of repeat customers monthly)
Fun & Friendly Environment (What is more fun than working in my yoga pants at home)
Established Company (Established and getting better)
Extensive Training (Can’t beat the training and support)
We Help You Get Started
Site Selection (No comparison, I can work from home, THEIR coffee shop or anywhere in the world. I’ve made calls from the beach!)
Lease Negotiations (Well, you may have to get creative for space but you don’t need much!)
Store Layout and Design (NON issue)
Inventory and Equipment Procurement (stop with the big words…we have online ordering)
Customer Service Training (Simply ask – how is that product working for you, my friend?)
Marketing and Advertising (We have complete training on that and enjoy teaching others this powerful skill)
Ongoing Support (Provided by the company – BAM!!!)
Ownership Qualifications (Dude, we own it and we take full responsibility for our success or failure!)
Minimum Net Worth of $400k (Have a credit card with room on it, you are qualified!)
Liquid Assets of at least $125k ( we want to help you ACHIEVE this!)
Strong management, social skills (these will help, and can be learned!)
Estimated Initial Investment – ranges from $241,500 to $440,000. Whoa! For less than $1000, in most cases , you can be in profit immediately!
Even more staggering are these numbers –
It’s $36,000 just for the franchise fee, and you are locked into a 10 year agreement with the company. And, the reserve the right to terminate the agreement at any time for non compliance.
Okay, so what would you rather do? Invest $1000 or so initially along with some ongoing advertising and misc dollars and be in profit VERY quickly, or invest anywhere from 1/4 to 1/2 million dollars and not be in profit for a few years and be chained to babysitting teenagers in many cases!
Now, let’s talk about Real Estate and Network Marketing and the two relate.
You can use this as an answer to the pyramid issue, or as a way to share how we get paid in Network Marketing.
Have you ever bought or sold real estate, or know anyone who has?
Would you describe that as a pyramid, since the broker earns a commission off every sale made by the agents “under” him/her?
Actually, I would call that pretty smart leverage, wouldn’t you?
Our profession is VERY much like Real Estate, really.
A real estate agent pays to go to school, pays to set up his/her office and pays all of their own expenses to launch a business.
It is a commission based business, and there are NO income guarantees.
It’s all based on hustle. Your own hustle that is!
In our profession, it costs a lot less to get started, and there is actually more income potential through the team building leverage!
If you are using this in response to the pyramid question, be sure to ask first – what do you mean by pyramid? (Never assume, because sometimes it’s just a way of describing how it’s built, nothing more.)
If they DO mean something negative, just compare to real estate agents and brokers, the costs to start a real estate business and how the pay flows.
1. Develop some simple language using these concepts so it flows easily off your tongue when the need arises.
2. Use this as an opening question – have you ever thought about going into real estate or buying a franchise? I’ve found something that pays as well or better, and costs a WHOLE lot less with no risk, would you like to hear more?
Learn more about building an effective Network Marketing business both online and offline in my Direct Sales Online Coaching Program!
Has this show helped you? Tweet me – @jackieulmer and if you have a question for the show, add the hashtag #JackieUlmer
Good luck in your business
Do you have a question? Ask it at JackieUlmer.com/questions
Until next time – remember this – Hesitation Never Cashed a Check!
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