On this page
Side by side
| Franchise | Business opportunity | Existing business | Commission sales partner | |
|---|---|---|---|---|
| What you get | Rights to run a business under a brand and system | A package to start a business, such as equipment, accounts or locations | The business itself: customers, assets, staff | The right to sell another company's product and earn commission |
| Typical upfront cost | Franchise fee plus setup, often substantial | Varies; often a required payment | Purchase price | Often none |
| Who owns customers | You, under the brand's rules | You | You | Usually the company you sell for |
| Ongoing payments | Royalties and marketing fees are common | Varies | None to a seller | None; you are paid |
| Control | Follow the franchisor's system | Varies | Full | Within the company's sales rules |
| Disclosure rules | Franchise laws in many places | Business opportunity rules in some places | General contract law | Depends on the facts and the place |
Franchises
A franchise usually combines a brand, a business system the franchisor controls, and a fee. Many places require the franchisor to give buyers a disclosure document before they sign or pay. In the United States that is the FTC Franchise Rule plus some state laws; in Canada, several provinces, including Ontario and Alberta, have their own franchise acts.
Youth sports franchises typically involve running programs yourself: leagues, camps, classes or clinics under a brand. That is operating a sports business, which is different from selling software to clubs.
Business opportunities
In the United States, the FTC's Business Opportunity Rule covers certain sellers who ask for a payment and say they will provide locations, accounts or customers, or buy back what you produce. It requires disclosure and restricts earnings claims. Some states have their own rules.
Buying an existing business
You buy a running business: its customers, cash flow, assets and obligations. Due diligence, financing and a lawyer's review of the purchase agreement are the main protections.
Commission sales partners
You sell another company's product and are paid on results. You usually don't buy anything and don't own the customer. The risk is your time: if nothing closes, you aren't paid.
Where the Territory Partner pilot sits
Play 2 Earn Sports' Territory Partner program is a small franchise: partners pay a one-time territory fee (about CAD 5,000 in Ontario), clubs sign with Play 2 Earn Sports, and partners earn a share of the fees actually collected. In Ontario this is a franchise under the Arthur Wishart Act. Because the total initial investment is $15,000 or less, no disclosure document is required, but the Act's duty of fair dealing still applies. We don't sell territories where a disclosure document or registration would be required, including British Columbia, Saskatchewan and several US states. There you can join as a Sports Ambassador instead, which has no fee. It is not a business for sale or a club or league to run.
Whether any arrangement is regulated as a franchise or business opportunity depends on its actual terms and on the law where it is offered, not on its name. We are having the program reviewed by counsel in each place it may launch, and we make no claim that it is exempt from these rules.
How to compare offers
- Ask for every payment you would make, now and later, in writing.
- Ask what you own if you leave.
- Ask whether earnings claims are backed by documented results.
- Read the disclosure document if one is required, and have a lawyer review it.
- Check the official sources below for the rules where you live.
Questions
Can a commission sales role replace buying a franchise?
It is a different arrangement with different trade-offs, not a substitute you can assume is equivalent or exempt. Compare them on cost, control, ownership and legal protection.
Do I need a lawyer?
For any franchise, business purchase or business opportunity, and for any agreement you aren't sure about, an independent lawyer's review is worth it.
Official sources
- FTC Franchise Rule (16 CFR Part 436) (opens in a new tab) United States federal disclosure rule for franchises.
- FTC Business Opportunity Rule (16 CFR Part 437) (opens in a new tab) United States federal rule for business opportunity sellers.
- Arthur Wishart Act (Franchise Disclosure), 2000, Ontario (opens in a new tab) Ontario franchise disclosure law.
- Franchising: information for buyers and owners, Government of Ontario (opens in a new tab) Plain-language guide.
- Franchises in Alberta, Government of Alberta (opens in a new tab) Plain-language guide to Alberta's Franchises Act.