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Semi-Absentee Franchise Ownership: A Mixed Bag

For many, buying a franchise means leaving a full time job for the freedom and opportunity that business ownership provides (or that they hope it provides). Trading in the 9-5 for a business where you call the shots. Where the buck stops with you. And where you have the great fortune (and sometimes burden) of making the tough decisions, and the great opportunity and potential to build and own your own business.

Thousands and thousands of people do this each year. Yet some, decide to keep their day job AND buy a franchise. Often termed “semi-absentee” owners, this minority of franchise buyers seek to hedge their bets. Keep the stability of their current job while simultaneously buying a franchise that they can run from afar, or at least from a distance outside of the 4 walls of the business.

Semi-absentee franchise ownership is a somewhat popular and preferred method of franchise ownership. Attracted to the prospect of diversification and perceived stability that this model provides, many with steady and often high-paying day jobs become franchise owners with the hope and trust that a manager will run the day-to-day operations with the owner overseeing the operations from a distance.

Great Clips, Supercuts, Sportclips and others all offer semi-absentee ownership opportunities. And while on the surface this may seem attractive, it is not without risk and potential pitfalls. After all, there simply is no true way to be absent from your business. Doing so will likely ensure that you don’t have a business for very long. Long hours, nights and weekends are all hallmarks of semi-absentee ownership. Not to mention the additional, yet necessary, cost of hiring a manager that you trust, is reliable, and knows how to manage effectively and efficiently. Along with the franchise & royalty fees, cost of startup, training, advertising and all other costs that go into running any franchise business, finding a person to manage your business while you work your day job is easier said than done, and can be down right scary. On the bright side, if you can find this person, you have a much better chance for success.

Perhaps, though, the most important consideration, which is often not discussed, is how much a semi-absentee owner can make (net profit). I believe It would be challenging for a semi-absentee franchise owner to net more than $50-75 thousand from owning one store. And while this is certainly nothing to sneeze at, it does come with a high price tag and significant risk. Certainly semi-absentee owners can own multiple locations, but it becomes more and more difficult to maintain your day job and run multiple franchises. This presents the catch 22 of semi-absentee ownership. Most people who go this route wish to own multiple locations. And while I agree on this strategy, the more you own the more difficult it is to maintain your day job. So at some point, you will likely move from semi-absentee to full fledge franchise owner.

On the flip side, franchisors that offer these opportunities, promote and embrace them. And why wouldn’t they? When a franchise buyer continues to maintain a steady stream of income from another job, the chance that they will be undercapitalized is reduced. This provides the franchisor with what they believe is a better way to help ensure the success of the business. After all, not having enough money to deal with the highs and lows of the first year of ownership is a recipe for disaster. What’s more, semi-absentee owners tend to follow the franchise system and model better. They tend to believe in the viability of the processes more than the average franchise owner. This makes good sense. Would you buy a franchise that you weren’t going to spend much time at if you did not believe in the system? I certainly wouldn’t.

Semi-absentee franchise ownership is a mixed bag. It affords an owner operator an opportunity to own a business without the fear of having nothing to fall back on if the opportunity fails. Yet the key to it all is to be able to find AND keep a manager that is competent, consistent, reliable, trustworthy and a true representative of your brand. This is much easier said than done. Just ask anybody who has ever owned a business. So, knowing all of this, is semi-absentee ownership appealing to you?

2 thoughts on “Semi-Absentee Franchise Ownership: A Mixed Bag

  • The new health insurance laws may help a small franchisees. The employees may qualify for subsidies in the health insurance exchange. The exchange benefits would be better than what the employer could offer or afford. So if we take health insurance out of the employee compensation package, then you may be able to hire better employees.
    http://www.indianahealthinsuranceexchange.

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