Last week, I explained that many of my clients want to understand the difference between being a franchise owner-operator and being an executive franchise owner. To help answer that question, I started a two-part series outlining the daily responsibilities of each role. This week’s post is the second in that series. Keep reading to learn how executive franchise ownership works on a day-to-day level.
Time Commitment
While an owner-operator works full-time in the franchise, an executive owner is involved on a part-time basis. Overall, executive ownership typically requires a time commitment of only 8-10 hours per week. Some executive owners may spend even less, if their franchise is well-established with good managers in place. And some–especially area developers or other multi-unit owners–may spend a bit more.
This low-key time commitment makes executive ownership ideal for people who are nearing retirement but want to stay busy. Many of my clients love the mental challenge of solving problems at work, and they enjoy the interpersonal element of doing business. They don’t want to give up those activities just because they’re approaching their 60s. By becoming an executive franchise owner, they keep the best of both worlds.
A Mentor, Not a Manager
An owner-operator directly manages the franchise and the employees who work in it. But an executive franchise owner fills more of a mentoring role. Rather than directing day-to-day activities, they set or approve strategies and serve as a resource and guide. This is true of sales, marketing, and daily operations. Executive ownership means hiring and trusting managers to make daily decisions, while being available to give advice or help solve problems if things get complicated. An executive owner may also serve as a personal mentor to the franchise’s managers by helping them improve their professional skills and advance in their careers.
Financial Responsibilities
Executive ownership doesn’t involve a lot of direct financial management. The franchise managers typically handle day-to-day transactions and bank activities, and an accountant typically keeps the books and pays vendors. An executive owner should certainly stay aware of their franchise’s finances. But they can do this through periodic reviews with their accountant. The more established and stable the business is, the farther apart these reviews can be. At these meetings, the accountant should go through the business’s profit and loss statement, discuss any areas of concern (such as a downward trend in revenue), and make the owner aware of any obligations such as tax payments.
Staffing
An owner-operator fills one of the franchise’s managerial slots, but an executive owner does not. So while an owner-operator usually only needs to hire one manager, or none at all, an executive owner often needs to hire two. Generally, these should be an outward-looking and an inward-looking manager: one to handle customer-facing matters (sales, marketing, and customer service), and one to handle business operations.
Executive owners don’t typically purchase home-based franchises, since they don’t intend to be directly involved in day-to-day operations. This means that executive-run franchises are usually the type that require line employees in addition to hired managers. Depending on franchise size, industry, and level of activity, an executive franchise owner should plan on hiring anywhere from two to six employees per location.
Meetings
Meetings are an important part of the executive owner experience. They’re the key to staying aware of what’s happening in the business, since the owner isn’t working in the franchise every day. If you want to be an executive franchise owner, you should expect to meet weekly with your manager(s) and to visit each franchise location in person at least once per month. Even if your business is running smoothly, these touchpoints will help remind employees that they are accountable to you as the owner. They’ll also enable you to pick up on situations that might escape your attention in a phone call.
While I believe that being an owner-operator is perfect for some people, I personally chose to be an executive owner. If you think that might be the path for you, too, then let’s talk. We can start the process with a simple, 15-minute chat. Book some time on my calendar today!
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