With All the Different Types of Franchise Ownership, Where Do You Start?
There are different types of franchise ownership models to suit just about anyone. But with literally thousands of opportunities from tons of different business areas, how do you pick? There are several aspects of your life that have to be considered before buying a franchise.
Do you want to own a franchise full-time or part-time? Do you want to own one unit or several? How much of your money and energy are you willing to spend on the franchise? Whether you are a corporate type looking to leave the 9-5 grind or a single-mother looking to have a side hustle business, franchising can be for you.
There are different types of franchise ownership depending on the amount of units you want to buy:
For people who are just entering franchising, single-unit franchising is the simplest way to get started. A single-unit franchise usually includes a protected territory, which can be measured by miles or population, depending on the brand. Single-unit franchisees are usually the owners/operators, so they can work on-site or in the field. Additionally, single-unit franchises can start off as small operations and can be scaled in different ways, such as by adding vehicles (for service-based franchises) or by hiring more employees.
Multi-unit franchisees own more than one location. This allows them to share resources among locations. Franchisees should be business-minded and growth-driven. They need to hire employees and managers to take over some of the daily operations. A benefit of owning multiple units is that they are usually sold at a reduced rate-per-unit, lowering the overall cost of your investment.
An area developer agrees to open a certain number of units in an area for a franchisor. This is beneficial for franchisors because the area developer exerts their own resources and efforts to build their area. The franchisor also provides training and support to the area developer, who in turn pays fees.
A master franchisee is the representative of the franchisor in a specific area, which can be a region or an entire country. The master franchisee can be thought of as a “mini franchisor” since they receive fees from the individual franchisees in their territory. The territory of a master franchisee can include dozens or hundreds of outlets.
As you can see, there are many ways to own a franchise, but there’s even more to consider…
TYPES OF FRANCHISE OWNERSHIP
Absentee Franchise Ownership
By definition, an absentee franchise owner legally owns the unit without actively managing it. They aren't involved in the daily operations of the business. This type of ownership depends on the franchisor. Nearly a quarter of franchises don’t actually allow for this kind of ownership. Industries best suited for this type of ownership include daycare centers, day spas, hair care, and food franchises.
Semi-Absentee Franchise Ownership
A semi-absentee franchise owner can check in on their franchise business while having ample time to pursue other business opportunities. This is a hands-off kind of franchise ownership, but it is a great way to make money while still working a day job or functioning as a multi-unit franchisee. Business areas suited for this type of ownership include ice cream franchises, tanning franchises, car wash franchises, and salon franchises.
Owner/Operator Franchise Ownership
Owner/operator franchisees are heavily involved in the daily operations of the business. These franchisees want full control over their investment and consider running the franchise a career. Typically, owner/operators are single unit franchisees.
Which is Best For Me?
The options and opportunities in franchising can be head spinning. Before choosing a franchise, seek the advice of a franchise consultant. Franchise consultants offer the guidance necessary to decide if franchising is right for you and what kind of franchise ownership best suits your skills, interests, budget, and lifestyle.