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KateHershey

Store Affiliate Programs - Yes or No?

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All I can do is guess, because I have never owned a franchise myself or known anyone who did.  Perhaps others with more experience will chime in here, or maybe you can repost the question in the Merchants forum, where more experienced peoiple are likely to see it.

My guess, however, is that you almost certainly won't get rich doing it.  After all, you have the up-front cost of buying land for the store, plus the monthly rental fee, plus your franchise fee.  To make a profit, you have to make sales that clear at least that much.  If the franchising merchant thought that s/he could make that much money, why would s/he be offering a franchise instead of opening a new store? 

As for how much to pay, that's impossible to say, but it should be as little as possible, obviously. The higher your costs, the more certain you need to be of sales.  Personally, I would think twice about paying more than the 5% commission that Linden Lab takes for sales on the Marketplace, but that's me.

Looking at it from the other side -- as a designer who had in-world stores from 2008 to 2012 -- I never once considered offering franchises.  I made a fair profit from my shops, but was never making enough to be a power merchant.  Certainly not enough that I could afford to share the profits with a franchisee.  Up to a point, profit margin in SL stays pretty constant as you increase the size of a store or add stores, because land fees increase too.  I suspect that the only merchants who can increase sales enough to make more profit by offering franchises are the few who have built a strong reputation and high visibility. If I were ever interested in taking a franchise, then, those are the only merchants I would even look twice at.

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All I can do is guess, because I have never owned a franchise myself or known anyone who did.  Perhaps others with more experience will chime in here, or maybe you can repost the question in the Merchants forum, where more experienced peoiple are likely to see it.

My guess, however, is that you almost certainly won't get rich doing it.  After all, you have the up-front cost of buying land for the store, plus the monthly rental fee, plus your franchise fee.  To make a profit, you have to make sales that clear at least that much.  If the franchising merchant thought that s/he could make that much money, why would s/he be offering a franchise instead of opening a new store? 

As for how much to pay, that's impossible to say, but it should be as little as possible, obviously. The higher your costs, the more certain you need to be of sales.  Personally, I would think twice about paying more than the 5% commission that Linden Lab takes for sales on the Marketplace, but that's me.

Looking at it from the other side -- as a designer who had in-world stores from 2008 to 2012 -- I never once considered offering franchises.  I made a fair profit from my shops, but was never making enough to be a power merchant.  Certainly not enough that I could afford to share the profits with a franchisee.  Up to a point, profit margin in SL stays pretty constant as you increase the size of a store or add stores, because land fees increase too.  I suspect that the only merchants who can increase sales enough to make more profit by offering franchises are the few who have built a strong reputation and high visibility. If I were ever interested in taking a franchise, then, those are the only merchants I would even look twice at.

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When we owned a full sim we bought a bunch of affiliates (Bootgasm, Inedit, Vaxer, just a few of the ones we owned) and had a ton of shops on our sim. We made out quite well as we also owned a club on this sim, and created events to "enhance" sales (ex. Best in Boots, Best in Leather, etc) and would let patrons know where to go in our mall to get stuff if needed. You can make some good money IF you have a good location, or something to draw people in.

 

     As far as a merchamt offering franchises, many of them do as another way to expand their customer base without the upfront costs of adding more land. Sometimes its almost impossible to keep up with all the tier payments, etc. Also, they use the franchises as a way to get their name out.. Say i have a hair franchise, I wouldn't necessairily offer every hair I sell to the franchise ppl, this way people also come to my main store to look..

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