Networking and franchising: Not a feasible business mix

CEBU, Philippines - Although networking or multi-level marketing has its own success path, it is unlikely to succeed if it is integrated in the franchise system, a franchising guru said.

RK Franchise president Rudolf Kotik said both networking and franchising systems have different business platforms that if joined together would just clash instead of thrive. "Why do you have to go to networking if you are successful in franchising,? said Kotik in an interview yesterday.

Kotik said there is only one pathway, either to go into networking multi-level platform, or adapt a franchising method.

A franchised business, he said involves a long term relationship between the franchisee and the franchisor, usually about five to 10 years. A multi-level or networking company, on the other hand, does not demand transactional commitment which could threaten the stability and sustainability of a business.

A franchised business is protected by legal and fixed contract, networking has other commitment strategies which is entirely different from a traditional franchise system.

A franchise business is a business in which the owners, or "franchisors", sell the rights to their business logo, name, and model to third party retail outlets, owned by independent, third party operators, called "franchisees".

Meanwhile, Multi-Level Marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participant's "downline", and can provide multiple levels of compensation.  (FREEMAN)