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When I'm speaking with clients who are looking for ways to expand their business the conversation often comes around to the possibilities of using agents, distributors, licensing arrangements or a franchise.

These sales partners have a lot to offer. But it's important to understand what each type of partner means for your business (equally so for online enterprises).

The term 'franchise' has become a common way of describing a business relationship where the franchisor allows other people to sell their products or operate the same type of business under the same name, usually within a designated area. But there is more to it than that. Much more. Legal obligations, management control, customer service and pricing are involved. And often 'franchise' is not the correct term for the relationship being offered.

Let's Have Some Definitions1

Agent: A representative for your company who will find buyers and sell your products. Also called a broker. Paid by commission on sales achieved. Stock is not usually held by an agent.

Distributor: An enterprise whose business is to buy merchandise for resale, usually to retailers or other industrial and commercial users.

License: A formal permission or authority to do, or not to do, something which otherwise would be a legal wrong. Often used when dealing with merchandise or procedures protected by trademarks and patents.

Franchise: A privilege granted by one organisation (the franchisor) to another (the franchisee) to sell, produce or use its products. Different types of franchises include:

According to the Franchise Council of Australia the most common franchise method is the business format franchise, with 708 different systems being offered in Australia.

Typically each type of sales partner is subject to geographic restrictions of some kind, such as a pre-defined territory. Depending upon the situation this may be part of a metropolitan area, a state, or an entire country. Ideally the size of the territory should be based on sales and/or profitability benchmarks. This is sometimes tough to calculate for new products and services.

At times the definitions may overlap. For example a 'manufacture franchise' may be the same as a 'license' for a manufacturer to produce certain items. The legal boundaries can be quite puzzling and expert assistance should always be sought.

Of particular importance is the requirement of a business format franchise to offer comprehensive training, support, business management procedures and marketing programs. This all-inclusiveness is a hallmark of a true business format franchise.

It takes a long time to develop the systems and knowledge required to create a business format franchise that conforms to the Franchising Code of Conduct and that will be of interest to serious franchisees.

If you find that your products do not require the intensity of support required by a business format franchise then the other sales partner options may be more suitable.

From a simple commission-based arrangement with an industry sales agent (or broker), to a more formalised licensing deal that may offer exclusive territory and advertising support, there are opportunities to get your partners working for you to increase your overall sales.

Don't Just Leave It To Your Partner

However, it's not simply a case of thinking, "Let's sign a deal and let them worry about getting the sales". No matter which option you choose there will be ongoing communication and support required from you if you want your sales partner to get the best results.

And there are always potential pitfalls in any relationship. Remember, the less committed your sales partner is to you, the lower your products or services will appear on their priority list.

So here are a few things to keep an eye on if you want to stay on track for success:

Sales Partners Online

It's no news to online businesses that they should use productive partnerships to increase their chance of success. For example:

Always do your sums and make sure your choice of sales partner presents the best outcome for you. Look for commitment, synergy, innovation and growth potential in prospective partners - your future depends on it.

Source: 1. The CCH Macquarie Dictionary of Business

Stuart Ayling runs Marketing Nous, an Australasian marketing consultancy that specialises in marketing for service businesses. He helps clients to improve their marketing tactics, attract more clients, and increase revenue. For additional marketing resources, including Stuart's popular monthly newsletter, visit his web site at www.marketingnous.com.au