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The difference between a franchise and a pyramid scheme is that a franchisee only sells products to consumers/end-users, not the franchise/brand itself. It mig
by Someone1234 8y ago
The difference between a franchise and a pyramid scheme is that a franchisee only sells products to consumers/end-users, not the franchise/brand itself.
It might sound like a subtle difference, but the incentives as a result of both business models are quite different.
Franchise sellers for example WANT their franchisees to operate the franchised business well. It is a "if they make money, we make money" situation. A pyramid seller only wants their agents to grow the pyramid, and they make money from sign ups even if everyone below loses money.
One is trying to create successful businesses, the other is trying to drain sign up fees from as many people as possible.
- pionar 8y ago> The substantial difference between a franchise and an pyramid scheme is that a franchisee only sells products to consumers/end-users, not the franchise itself. Not true. Most franchisors make a royalty from sales, but also make a profit from being the exclusive distributor of everything in the franchise - napkins, cups, food, etc. Your general point is correct though.
- Someone1234 8y agoI don't understand the "Not true" there. I said the franchisee only sells products to consumers/end-users, not the franchise itself. It isn't a chain-sign up situation. Your point seems to be that the franchise makes money from franchisee reselling, but I never said otherwise...
- cooperadymas 8y agoIt looks like the GP possibly misread your comment and missed the extra 'e' on 'franchisee' in the first sentence.