Although I’ve heard it called that, I’d have to fall on the side that says a Network Marketing business is NOT a Micro-Franchise business. If I had to, I might refer to Network Marketing as a mini-franchise with qualifications.
First some definitions: a business that has the Network Marketing [or Direct Marketing or Relationship Marketing] tag is a business model in which independent distributors [independent contractors for, not employees of the parent corporation] have two products: the company’s basic retail product(s)/service(s) and the business opportunity [to become an independent distributor].
A Franchise is basically a business model in which a parent company has a proven product or service and then licenses through a continuing contract relationship the right to operate that business under the franchisor’s trade name and guidance and usually in a specific territory or area. One famous example is McDonald’s™.
A Micro-Franchise is defined as “Microfranchising is a development tool that seeks to apply the proven marketing and operational concepts of traditional franchising to small businesses in the developing world. The primary feature of a microfranchise is its ability to be streamlined and replicated. The businesses are designed for microentreprenuers and usually target development issues such as health, sanitation, and energy.” – [ ref: http://microfranchising.blogspot.com/2007/01/definition.html ] This is in that same category of developing nation economic growth offerings such as micro-loans. Awesome ideas.
So, now for the discussion: I would not categorize a Network Marketing business as either a Franchise or a Micro-Franchise. It is what it is: its own business model. But, then again, maybe it is like a mini-franchise but with no territory restrictions or ongoing licensing fees and you are not tied to a brick-n-mortar structure and you have no employees, but like a franchise you have a continuing relationship with the parent company, the right to sell the products and the availability of support and training. But then again, the buy-in is vastly different. A franchise is in the “lots of money” category, whereas the buy-in for a Network Marketing business is often small.
What do you think?