What Is The Difference Between Franchising and Multilevel Marketing?

If you're thinking about buying into an existing business and making it your own, either as a sideline or a new permanent, full-time venture that you plan to fit around your lifestyle, you may be wondering whether franchising and multilevel marketing are the same thing.


Franchising and multilevel marketing have some similarities:

  • They are both business opportunities that offer a chance to buy into an established brand and access their business model, marketing material, and stock.
  • They both involve paying upfront costs to become a part of the business.


This tends to be where the similarities end. With a multilevel marketing business, you are often required to purchase a minimum order quantity of stock per month, and failure to do so can result in penalties. Many people involved in multilevel marketing therefore spend a lot of time using social media and other online sales platforms to make as many sales as possible to generate their income. Many multilevel marketing companies also require their agents to recruit more salespeople to the brand.

Franchising involves buying into an already established company, which gives you access to the company's business model, advertising, product and training. In addition to paying a purchase cost, you are also required to make royalty payments to the brand. There is a wide range of franchises available to choose from, and not all involve selling goods; many involve the delivery of services, such as salon services, cleaning and bookkeeping.

While both options offer people a legitimate step into the world of self-employed business, it is important to carefully consider exactly what you wish to get out of a business and the level of risk that you are prepared to take before choosing which to engage in.

There are many franchise consultants in Canada that can help you with all the paperwork required to join a franchise, including all legal and financial aspects, and it is highly recommended that you engage one at the earliest opportunity as they will be able to help you make the transition into franchising in general and select the most appropriate business venture for you.

If you choose to go down the path of multilevel marketing, it is vital that you ensure that the company is operating as a legitimate business and not a pyramid scheme, as pyramid selling is illegal and constitutes a criminal offence in Canada.