In the franchise world, many people using the terms executive franchise ownership and absentee (or semi-absentee) franchise ownership interchangeably. I actually used to do this myself. When I first became a franchisee, I thought of the two types of ownership as the same thing. As I’ve gained more experience, however, I’ve realized that there is a key difference between them–even if it’s just a question of mindset, rather than an official distinction.
Absentee franchise ownership is passive, but executive franchise ownership is active.
This doesn’t mean that an executive franchise owner works full-time in the business. That’s what owner-operators do. But it does mean that an executive owner takes an active and ongoing interest in the business. This is a different approach than the one taken by an absentee owner, and here are three reasons why.
An absentee owner sees an investment; an executive owner sees a venture.
For an absentee owner, a franchise is often purely a financial investment. They pay the required amount to buy in, they check the boxes to get things up and running, and then they wait for the financial return. They have little emotional attachment to the people or the business itself–they just want to build wealth.
An executive owner, however, sees a venture: an opportunity to try something new and exercise their skills. The experience itself, of building a business and watching it grow, is important to them. They care about the journey as well as the destination and hope to learn something new as they develop their franchise.
An absentee owner detaches; an executive owner engages.
Absentee owners typically invest minimal personal effort in the business. Because their primary goal is achieving a financial return, they do what they need to do to accomplish that objective. They don’t typically build strong relationships with their employees–the people who run the business on a day-to-day basis. They may not be very aware of what those people do each day, or of nuts-and-bolts details about the business. Absentee owners may even tell their employees, “Don’t call me unless something goes wrong.”
Executive franchise ownership, however, means engaging with the business. Executive owners often hand-pick their employees and build relationships with them. While absentee owners are often reactive, only getting involved when serious problems arise, executive owners are proactive, keeping themselves aware of business details. They review balance sheets, strategize, and check in with employees frequently, regardless of whether the business needs this involvement or not.
An absentee owner is, well, absent; an executive owner is present.
Absentee owners are usually around during a franchise’s launch stage, but then they often disappear. Unless something is going wrong, they may visit the business so infrequently that only the managers ever meet them. Their goal is to get things going, then hire a team so solid that they don’t have to think about the franchise until it’s time to collect their return.
Executive owners, however, often like to hire a solid team but still show up regularly on site. Many of them maintain a schedule of monthly or quarterly site visits. Some also like to interact with customers occasionally, to ensure that people are having a positive experience with the franchise. This is not because they don’t trust their teams, or because they’ve hired people who aren’t as good at their jobs. Rather, it goes back to their appreciation for the journey–they enjoy the energy of being on site and seeing the business activity firsthand.
There’s nothing wrong with being an absentee franchise owner. If you just want to build your investment portfolio, already have a lot on your plate, or are retired and don’t want anything else to do with business, absentee ownership may be a great fit for you. Just make sure that you hire an excellent team to run your franchise, or invest as a silent partner in a joint venture.
Executive franchise ownership is a better fit, however, if you’re the type who likes to stay busy. That’s how I ended up as an executive franchise owner. I knew that a classic retirement wouldn’t suit me. Sure, I wanted more time for family, friends, and hobbies. But I also wanted to keep solving problems, exercising my mind, and using the business skills I worked so hard to develop. If you feel the same, or if you’re looking for more control over your schedule and aren’t ready to retire, book a call with me. I can help you assess your franchise ownership options and find the best fit for your goals and lifestyle.
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