The 3 Types of Franchise Ownership

Most people are not aware of the types of franchise ownership options they have when researching franchises. We will discuss each option below and keep in mind that each franchise reserves the right of which options to offer.

Option #1: Owner-Operator Model

In this model, the franchise owner is full-time running the day-to-day operations. This can be a great fit if you are thinking about leaving your job. At some point, the franchise owner may train a general manager to run the day-to-day while they take more of an executive role overseeing the business and working on expansion plans.

Option #2: Semi-Absentee Model

The Semi-Absentee Model has been very popular as this model will allow you to hire a general manager or key employee to run the day-to-day operations while the franchise owner works “part-time” in the business. This model is great if you are planning on keeping your full-time job to start and later transitioning to a more active role in the business.

Two subcategories I want to mention are Master Franchises and Area Developers.

In a Master franchise model, you essentially purchase the rights to a geographic area i.e., Austin Texas, or an even larger market, and find franchise owners for that specific area that you will support. In return, you are compensated by a % of the initial franchise fee and ongoing royalties.

Area Developers are franchises that also acquire a larger geographic area, but in this case, they own the franchise and will develop multiple territories over time or open multiple locations over time.

Option #3: Investor / Semi-Passive Model

Finally, a model that has been increasing in popularity is the Investor / Semi-Passive Model. In this model, the franchise owner will pay the corporate office to launch and run the business for them in exchange for a flat monthly amount or % of revenue. The reason this model has increased in popularity is that people are looking for ways to truly diversify their investments while only investing a minimal amount of time. The time commitment can vary, as you will be focused on monitoring the business, reviewing KPIs with your manager, and working on the business.

I hope this article was helpful and the purpose was to simply give you a general overview of your franchise ownership options and a great way to narrow your franchise search down based on the above options.

Check out the podcast for even more detail and let me know if you have any questions.

If there is a topic you would like me to address or a question to answer, please send me an email and that may be the topic of our next show!

About Giuseppe Grammatico:

Giuseppe Grammatico is the author of Franchise Freedom and host of The Franchise Freedom Podcast. He helps corporate executives find financial and time freedom through franchising.

Through all his years in business ownership, he must say that franchising has been the source of the most fulfillment in his business life.

The freedom, flexibility, impact, and income he has been blessed to experience could not have been possible without franchising. He is excited to help others find it through the same path.