🠈  Association Model  🠊

The Association Business Model

I am interested in the many different ways that people organize businesses. People have developed many intriguing models.

For example, there is a type of business called a Real Estate Investment Trust. The structure of a REIT was created by the Federal Government and is enforced through tax policies.

In a franchise model, the franchiser creates a model for a business. The franchiser then sells the rights to franchisees to run businesses based on the model. In most cases the franchiser controls all aspects of the business including advertising and distribution.

Ace Hardware is a merchant collective. In this model, the individual stores cooperatively own the core business and the distribution channel. The merchant's cooperative gives the members of the organization a little more leeway in setting up their businesses. Notably, Ace Hardware stores have different inventories and different management styles.

The Association Model

I believe that the most robust way to create a new class of business is through a thing I will call "The Association Model"

The central association is a private institution that holds trademarks, define terms and contracts and over see the development of software used in the model. The association will provide a limited amount of publicity for a group and will be engaged in legal work related to the contracts.

I hate to use the word non-profit. The association creates value by defining terms and contracts. Anything that creates value is actually creating profit.

What happens in the association model is that the member organizations realize the profit from the work performed by the central organization.

Since the central association does not handle much money, there is really is no need to go through the hassle of registering the association as a non-profit.

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