Franchisors generally come in two sizes: national brands and regional brands. In January, I covered the pros and cons of each. National brands tend to have more resources and better brand recognition, but with much higher costs and more rigid business systems. Regional brands tend to have lower costs and more flexibility, but with fewer resources and possibly less opportunity for growth. If you read those blog posts and are wondering which type of brand might fit your franchise ownership style, you’re in luck! This week and next week, I’ll be covering how to match your ownership style to franchise scope. This week: how to tell if you’re the right kind of franchisee for a regional franchise brand.
You Have Less Money to Invest
Regional franchisors tend to be less expensive than national outfits. Total startup costs are usually in the tens, rather than hundreds, of thousands of dollars. Ongoing expenses are often lower, too. This is because regional brands often allow single-unit ownership or have a lower minimum for multi-unit owners. That means you’ll pay less in royalties, marketing fees, and operating costs right from the start.
Those lower costs have an added bonus: you might be able to break even or pay yourself a salary more quickly than with a more-expensive franchise. Compared to someone purchasing a national franchise, you may also be able to get by with a smaller financial cushion. You should still have a way to pay your bills while you’re launching your business, but it might be easier for you to live on savings or get by with a part-time (instead of full-time) side gig.
You Want Ownership Flexibility
If you’re looking for an opportunity to be an owner-operator, becoming a franchisee for a regional franchise brand may be your best bet. Regional brands are more likely to allow single-unit ownership, which is usually the best option for owner-operators. At the same time, regional brands also usually allow multi-unit ownership or area development, so they’re also suitable for investors who want to be executive or semi-absentee owners.
Overall, this means that a regional franchisor will probably offer more ownership options. This flexibility is helpful not just when you’re starting out, but also as your business grows. You can begin as an owner-operator of a single location, then add more locations and transition to an executive role if you want. I especially recommend this kind of plan for new franchise owners in their 40s or early 50s who want to play the long game. You can work in the business for a while, grow it and build wealth, then hire a manager and step back for retirement.
You Have Limited Business Experience
If you want to own a franchise but have limited business experience, a regional franchise brand may be a better fit for you. First, the option to own just one location makes entrepreneurship more manageable. You can learn as you go without the complexities of managing a distributed enterprise and a large team of employees. Second, regional franchisors often provide more personalized support. You can more easily make meaningful connections with both your fellow franchise owners and the corporate office. So when (not if) you have questions, you can more easily get answers.
You Want to Be a Big Fish in a Small Pond
You may also want to sign on as a franchisee for a regional franchise brand if you like being “first among equals.” When the network is smaller, it’s easier for someone with big ambitions to stand out from the pack and get special attention. You’ll also have fewer people to compete with for special opportunities, such as advisory positions. And you may be better able to influence franchisor leadership or other members of the network. Overall, regional franchises are a good option for people who want to contribute actively to the long-term formation of the business.
If you’re still not sure what type of franchise suits your ownership style, I’m here to help. My services are always free, and it just takes 15 minutes to get started. Book a call with me today!
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