If you want to be a franchise owner, you need to evaluate your franchise options. But did you know that you also need to evaluate your ownership options? There’s not just one. As a franchise owner, you can choose from several different levels of involvement in the business. The best option for you depends on your financial resources, personality, business skills, and more.
Franchise Owner #1: The Owner-Operator
When most people think of franchise ownership, they think of the owner-operator. This is someone who not only owns the franchise but works in it full-time. Unless they purchased a turnkey franchise, they personally oversee the business setup and launch. They also supervise employees, serve customers, and manage vendors on a day-to-day basis. If the franchise is a brick-and-mortar business, the owner-operator works on site, like a corporate employee would in an office.
Owner-operators need to have solid business, operational, customer service, and leadership skills. This option can be a particularly good choice for younger franchise owners who are seeking self-employment, not a path to early retirement. It can also make franchising more affordable, since you don’t have to hire a full-time manager for your business. However, it’s a demanding job. You need to have plenty of energy and be in a position to work long hours, at least at first.
Franchise Owner #2: The Executive or Semi-Absentee Owner
An executive franchise owner (sometimes called a semi-absentee owner) is someone who sets business strategy and oversees operations but does not work full-time in the business. Depending on the person’s preferences and leadership style, they may check in on the business every week or just a few times per year. An executive franchise owner typically has limited to no contact with customers, and they hire people to manage day-to-day operations, accounting, and marketing. The best executive owners, however, are always aware of what their delegates are doing and stay in regular contact with them.
Executive ownership is a good choice for people who want to own multiple franchises, are ready for semi-retirement, or want to own a franchise while working in some other field. Being an executive franchise owner requires similar skills to running a company (or a division within a corporation), so it’s a particularly good option for franchisees with executive experience. If you like to micromanage projects or people, however, this option is not for you. Also keep in mind that, on a single-franchise basis, the need to hire a team makes executive ownership more expensive than being an owner-operator. But it frees you up to manage multiple franchises at once, so you can achieve economies of scale and potentially build greater wealth overall.
Franchise Owner #3: The Silent Partner
A silent partner is a franchise owner who contributes significant funding to the business but is not involved in strategy or operations. Instead, they partner with at least one other individual who can take on those responsibilities. A silent partner usually contributes more money than their fellow owner(s) in return for being exempt from strategic and operational duties.
For most franchise owners, being involved in the business at some level is part of the appeal of franchising. But if you are attracted to franchising simply because of its wealth-building potential and have a large sum to invest, silent partnership may be a good option for you. Just keep two things in mind: you must be comfortable having little to no say in business decisions, and you must have strategic/operational partners you can trust.
A Note About Partnerships
Silent partnership is not the only way to team up with other franchise owners. Owner-operators and executive owners can also build franchise partnerships. If you’re interested in this option, choose your partners carefully. You must be able to trust each other, and your skills should balance each other. If everyone in a partnership is good at strategy but bad at operations (or vice versa), the business will probably fail. And no matter how much you trust each other, you should still have a written contract. Your contract should clearly spell out each partner’s financial obligations, business role, and share of returns.
Need help figuring out your ownership type? I’m not only a franchise owner myself. I also work with franchise owners whose styles are very different from mine. I understand how different personalities and backgrounds equip people for different types of franchise ownership. Book a call with me to start the process of discovering your ownership style!
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