Types of Franchise Ownership
There are several franchise ownership models. They require varying degrees of the involvement in day-to-day operations.
Owner / Operator
This type of franchise requires the most intensive involvement. As the owner and operator, you work full-time in the business and are involved in all aspects. In other words, you wear all the hats.
With this ownership model, you make a full-time commitment with a focus on building the business. Your employees do the day-to-day work, freeing up your time to concentrate on developing strategy, executing a marketing plan, managing financials, and leading your team.
As a semi-absentee franchise owner, you “manage the manager” who oversees all day-to-day matters. You typically devote 10 to 15 hours a week to provide executive leadership, coordinate administrative functions, and set long-term strategy. Many semi-absentee owners keep their day jobs while launching their franchise business.
A master franchisee (sometimes called regional or area franchisee) buys the exclusive right to sell or open a given number of franchises within a large geographical area. Within that territory, the master franchisee recruits, trains, and provides ongoing support to each franchisee they sign. In exchange, the master franchisee receives a percentage of the initial franchise fee and ongoing royalties paid by these franchisees. This type of ownership enables you to develop a large business operation within a relatively short period of time. While the investment required is larger than for other models, the rewards can also be much greater.
Franchise Service Models
While franchising may bring to mind fast-food restaurants and storefronts, in reality there is an appealing variety of franchises that thrive without the need for a traditional brick-and-mortar location.
Technology makes it possible to perform many business activities remotely, making it possible to run a franchise business out of your home. This model offers many benefits including lower overhead costs, fast and easy startup, and the convenience of working from home. Examples include consulting, accounting and professional services, and digital and other marketing services.
This model offers flexibility and lower startup costs. It appeals to owners who prefer to work out in the field instead of being tied to an office or storefront. Examples include home and business repair services, pet grooming, and food trucks.
Business-to-business (B2B) franchises sell products or services to companies or business owners. Businesses need a variety of products on an ongoing basis and believe it or not, there exists a franchise to fulfill almost every need. In the service category, some franchises provide ongoing services while others offer niche services that are needed from time-to-time. Examples include printing, cleaning, payroll, and insurance companies.
Businesses with a small real estate footprint (typically 1,000-2,000 square feet) are known as “light retail.” Many of these opportunities are manager-operated, semi-absentee businesses, enabling new franchisees to keep their job or run other entrepreneurial ventures while their new business ramps up. Examples in this category include boutique fitness, tutoring, and salon services.