Wednesday, January 13, 2010

Amway Global - Comparing Amway To McDonalds?

I think it's time to dispel any silly comparisons of the Amway opportunity to McDonalds. First of all, Amway is not a franchise opportunity. If they were, Amway would say so and you would have to sign a franchise agreement with Amway. Amway would also train you on how to run your business. But this isn't the case. As an Amway IBO, you are basically a middleman distributor who works on comission.

As an IBO, you are dealing with 2 businesses. Amway the corporation sells and supplies you with products. You also earn an income from Amway based on your movement of volume. The second is a for profit business, seperate from Amway that sells voicemail, books, cds, and seminars. Supposedly, these materials are designed to help you succeed in Amway. These for profit groups such as N21, BWW, or WWDB operate independently from Amway. You as an IBO have to decide whether or not you should participate. Given the miserably low success rate that these systems churn out, I would urge prospects and IBOs to think about this if they will spend money to participate.

McDonalds is a large worldwide franchise opportunity. They sell you the rights to a franchise and they train you to run the store. They research demographics and look at geographical locations to make the likelihood of your success nearly 100 percent. When you own a McDonalds, you get your supplies from Golden State foods. Golden State foods operates independently from McDonalds. Ray Kroc and McDonalds corporation does not profit from the sale of hambuger meat and napkins, etc.

Here's the tricky part. You can compare Golden State foods to the tool companies such as N21, BWW, or WWDB, but the difference is that Ray Kroc and other McDonalds owners do not profit from the supplies sold by Golden State foods. In Amway, you have a select few distributors, generally Diamonds and above selling training materials and promoting them as the key to success in Amway. Many of these diamonds and above profit handsomely from the sale of these materials and they are compensated whether an IBO makes a profit or not. Imagine if Ray Kroc and other McDonald's owners owned Golden State foods, and jacked up the prices of the supplies, and then made expensive and ongoing training for new McDonalds franchise owners and told them this is how you succeed, and then 99% of new McDonalds owners failed and went out of business. Now you have a valid comparison to the Amway opportunity as run by the groups such as N21, BWW and WWDB.

In summarizing, there is no comparison. McDonalds owners are very successful as a group while Amway business owners are not. Comparing the businesses are silly and I wish IBOs would stop. It makes them look silly.


Anonymous said...

here the few things you left out though, what is the startup cost of mcdonalds? mill+ plus interest. Royalty paid to corporation. a few things I can't think off the bat, I used to own a subway franchise. it was a headache I was required to buy only from subway distrubutors, 7% of royalty of my total cost, then tons of other fees like I have to use their merchant, rental cost of pos, I believe it would be the same as mcdonalds. their rules all the way.

Joecool said...

The difference is that with McDonald's, you will recoup your investment over a few years and will likely earn a 6 figure income. Most IBOs never even recoup their sign up cost, let alone the cost of training materials.

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