3 Types of Franchise Ownership

Thinking about buying a franchise business? Well, no matter who signs the purchase agreement, writes the check, and owns the franchise, someone is going to have to operate the business on a day-to-day basis. In many cases, buyer and manager are one and the same – but not always.

Here are the three most common franchise ownership models, and a bit of background on each one:

ExecutiveExecutive. The franchisee owns the business, but hires out all functions required to operate it, including day-to-day management. This person often has little or no physical presence at the business location and owns the business purely as an investment, not as a way to create or change an employment situation.

Owner-operatorOwner/Operator. As the name implies, this model places the franchisee front-and-center in the function of the business. Franchise owner/operators typically work onsite most or all days that the business is open. They directly supervise the help that is needed to run the shop, and have little time to do much beside keep their franchise going, to an extent that other employment is practically impossible.

Franchisors often seek to build their franchise chains on the owner/operator model, because they know intimately the qualities necessary to succeed. They define a set of attributes and then fill their slots with folks who fit the bill, as part of the overall franchise recipe.

Semi-absenteeSemi-Absentee. Operational responsibility falls somewhere in the space between executive (hands-off) and owner/operator (hands-on) in the semi-absentee model. Many semi-absentee franchisees begin by keeping their day jobs and relying on the help of a manager to get their first store off the ground. If such a franchisee succeeds with their first unit and decides to open additional ones, running the multi-unit franchise may prove lucrative enough for the semi-absentee owner to leave their day job and focus solely on the growing business venture.

Franchise business models vary in their structure and in the desires and goals of the franchisor, so not every franchise is adaptable to more than one of these ownership models. Thorough research of the franchise you are considering, as well as an honest assessment of your own strengths, weaknesses, and financial wherewithal, will guide you toward the franchise ownership model that’s right for you.

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