Hey everyone,
As some of you may have seen, I am now sponsoring the board and my goal is help educate those of that are interested in learning about what franchise ownership is all about and how it changed my family’s life. I got into franchising as a way out of the corporate rat race about 9yrs ago. Since then, I've owned multiple brick and mortar franchises, a service based homecare agency, and been a Regional Developer (more on that below) and a dumpster/porta potty company. I will dive deeper into my background and various franchise related topics over the months through this series of posts....so I hope you all find this of value....
To kick things off, I figured we should start with a general overview of the various ownership models in the franchise world.
So here we go….
1. Owner/Operator Franchise
In this model, the franchisee is a key employee working full time in the business. Franchise owner/operators typically work in an operational or sales role as well as overseeing all business needs. Due to your level of responsibility, you cannot keep your day job. Typically, you are able to transition out of full time once the business matures and you can employ someone to take on your day-to-day responsibilities. Service based businesses (which I LOVE) are great examples. Think anything you service a home or office with. My homecare agency, Synergy HomeCare is a prime example. I was the owner/operator/key sales rep the first 3yrs, then hired a sales rep to replace me and transitioned into an executive management role. I now work 5-10 hours a week on the business.
2. Semi-Absentee Franchise
A semi-absentee business is one you could start and run while still maintaining a job or other primary interests. Semi-absentee ownership typically requires a 5 – 20 hour a week time investment. In these businesses, the franchisee manages a single general manager who runs the daily operations. In a semi-absentee model franchise, the franchisors do not want the owner working in the business on a day to day level. Outside of managing the GM, typical responsibilities of a semi-absentee manager are creating your business culture, Key Performance Indicator (KPI) analysis, and working on aspects of the business – preparing for growth, scaling to multiple units – and never as a key employee. Great examples of semi-absentee businesses are Orange Theory Fitness, Supercuts, Massage Envy…really anything you see in a strip center is typically semi-absentee.
3. Master Franchisee
A master franchisee is a person or entity who has been contracted by the franchisor to provide services to franchisees in a specified territory, usually a major market or one or more states. The master franchisee typically pays the franchise company a significant initial fee for the rights to develop the territory and then retains most or all the initial fees and royalties paid over time by the individual franchisees in the territory. That master franchisee is usually responsible for recruiting the individual franchisees and providing all training and support they need, both initially and on an ongoing basis. These opportunities are very rare and sometimes only available when franchisors want to grow outside the United States.
4. Area or Regional Developer
An Area Developer or Regional Developer (AD/RD) acts as local development for franchisees, consulting with prospective franchisees for their market with the goal of placing them in open territories. An AD/RD also acts as the franchisor’s local support person.
Under this arrangement, the AD/RD and the franchisor share both the responsibilities to the franchisees and the revenues from them. The AD/RD — like the franchisor — also has a large upside potential. Typically, this model consists of revenue sharing between both parties on initial franchise fees and ongoing royalties from all the open stores in that region, plus any revenues and royalties from a location or locations that the AD/RD also owns. I was a Regional Developer for Synergy HomeCare. It was a great investment/exit as Private Equity bought us all out with a strong multiple.
Ok…so that’s a good dive into what franchise ownership models look like. If you have further questions about franchise or business ownership, I would love to connect. So either email me at aluedecke@myperfectfranchise.net or call/text at 404-973-9901
Thanks,
Andy
As some of you may have seen, I am now sponsoring the board and my goal is help educate those of that are interested in learning about what franchise ownership is all about and how it changed my family’s life. I got into franchising as a way out of the corporate rat race about 9yrs ago. Since then, I've owned multiple brick and mortar franchises, a service based homecare agency, and been a Regional Developer (more on that below) and a dumpster/porta potty company. I will dive deeper into my background and various franchise related topics over the months through this series of posts....so I hope you all find this of value....
To kick things off, I figured we should start with a general overview of the various ownership models in the franchise world.
So here we go….
1. Owner/Operator Franchise
In this model, the franchisee is a key employee working full time in the business. Franchise owner/operators typically work in an operational or sales role as well as overseeing all business needs. Due to your level of responsibility, you cannot keep your day job. Typically, you are able to transition out of full time once the business matures and you can employ someone to take on your day-to-day responsibilities. Service based businesses (which I LOVE) are great examples. Think anything you service a home or office with. My homecare agency, Synergy HomeCare is a prime example. I was the owner/operator/key sales rep the first 3yrs, then hired a sales rep to replace me and transitioned into an executive management role. I now work 5-10 hours a week on the business.
2. Semi-Absentee Franchise
A semi-absentee business is one you could start and run while still maintaining a job or other primary interests. Semi-absentee ownership typically requires a 5 – 20 hour a week time investment. In these businesses, the franchisee manages a single general manager who runs the daily operations. In a semi-absentee model franchise, the franchisors do not want the owner working in the business on a day to day level. Outside of managing the GM, typical responsibilities of a semi-absentee manager are creating your business culture, Key Performance Indicator (KPI) analysis, and working on aspects of the business – preparing for growth, scaling to multiple units – and never as a key employee. Great examples of semi-absentee businesses are Orange Theory Fitness, Supercuts, Massage Envy…really anything you see in a strip center is typically semi-absentee.
3. Master Franchisee
A master franchisee is a person or entity who has been contracted by the franchisor to provide services to franchisees in a specified territory, usually a major market or one or more states. The master franchisee typically pays the franchise company a significant initial fee for the rights to develop the territory and then retains most or all the initial fees and royalties paid over time by the individual franchisees in the territory. That master franchisee is usually responsible for recruiting the individual franchisees and providing all training and support they need, both initially and on an ongoing basis. These opportunities are very rare and sometimes only available when franchisors want to grow outside the United States.
4. Area or Regional Developer
An Area Developer or Regional Developer (AD/RD) acts as local development for franchisees, consulting with prospective franchisees for their market with the goal of placing them in open territories. An AD/RD also acts as the franchisor’s local support person.
Under this arrangement, the AD/RD and the franchisor share both the responsibilities to the franchisees and the revenues from them. The AD/RD — like the franchisor — also has a large upside potential. Typically, this model consists of revenue sharing between both parties on initial franchise fees and ongoing royalties from all the open stores in that region, plus any revenues and royalties from a location or locations that the AD/RD also owns. I was a Regional Developer for Synergy HomeCare. It was a great investment/exit as Private Equity bought us all out with a strong multiple.
Ok…so that’s a good dive into what franchise ownership models look like. If you have further questions about franchise or business ownership, I would love to connect. So either email me at aluedecke@myperfectfranchise.net or call/text at 404-973-9901
Thanks,
Andy
