Ask a consultant

  • Updated: June 22, 2008 - 10:13 PM

Q We are looking for a business model -- other than one that fits within the legal definition of a franchise -- to develop a network of professional firms that can refer work to one another.

The firms would be independent, but would operate under a common name that we would license to them. The benefit of participation would be the sending and receiving of business referrals.

The network, by itself, would not be a source of revenue for us or for the other businesses. They would pay us nominal fees in order to defray administrative expenses, but would not pay royalties.

DAVID KOLB

GLOBAL TAX NETWORK

A Potential sources of revenue are sales of products or services, subscription or membership fees, royalties or commissions or selling advertising within the network. Your current plan to have participants in the network pay "nominal fees" is a sales or subscription model, though you need to set the basis for those amounts.

That model could work -- but realize that others can, too. LinkedIn, for instance, is free to users and accepts advertising. Industry pundits believe that memberships and advertising will be the primary revenue sources in the future.

You want to avoid being a franchise, presumably to avoid the requirements that regulate such operations.

If your goal is to build a business-networking site, find ways to improve on the current business models.

If your goal is to create a professional services organization under a brand name, I recommend connecting with a lawyer. You need specific advice to create the business relationship that accomplishes your goals.

MARK SPRIGGS,

DIRECTOR, SCHULZE SCHOOL

OF ENTREPRENEURSHIP

UNIVERSITY OF ST. THOMAS

OPUS COLLEGE OF BUSINESS

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