To generate passive revenue, you will need to run your franchise as an absentee or semi-absentee franchise owner. This simply means that you are not involved in the business's day-to-day operations.
The majority of smaller franchise operations are not operated in this way. Instead, the owners manage the business on a daily basis. They are known as owner-operators. As an owner-operator, your income is created actively.
We know that some level of absentee ownership is key, but most franchises require a minimum number of hours spent working on the business. In addition, as a semi-absentee owner, some franchises allow you to choose the responsibilities you wish to focus on, such as marketing, sales, or accounting.
This model allows you to leverage your abilities, expertise, and interests to expand your business and stay motivated.
If you want to know whether a franchise can be successfully managed as an absentee or semi-absentee owner, you should ask the four questions below.
1. Is Absentee Franchise Ownership Allowed by the Franchisor?
This is the most crucial question.
If the response is no, that franchise is effectively ruled out. Unfortunately, many franchisors do not permit absentee or even partially absentee ownership. However, there are many who do.
Here are some types of franchises that tolerate and even encourage absentee ownership. They might be excellent options for you to start with.
- Boutique fitness franchises
- Personal Care franchises
- Children's Education or Well-being franchises
- Car wash franchises
- Salon franchises
- Home Service franchises
2. Is there enough cash flow generated by the franchise?
You will want to own a franchise with high cash flow, meaning you have money left over after all operating expenses have been paid. When looking for a passive income franchise, you should ensure it has enough cash flow to support the management and staff.
If you purchase a franchise that does not create that kind of cash flow, you will be an owner-operator. You didn't acquire a business in that situation. You bought a job.
3. Is it necessary to have any special licenses or skills?
You want to purchase a franchise that will allow you to run the business without any specific knowledge, licensing, or training other than the training that the franchisor provides.
For example, if you wish to run an at-home childcare business, it might require a daycare license. Alternatively, if you are interested in purchasing a franchise in the health services field, you may be required to obtain a professional license.
Therefore, the less the business requires your talents and knowledge to handle daily operations successfully, the better suited it is as a passive income business.
4. Is Absentee or Semi-Absentee Ownership Available in this Business Model?
This is essential. When assessing a franchise, consider how many of the owners own numerous locations. If the answer is yes, then the business model can most likely sustain absentee or semi-absentee ownership.
When owning a semi-absentee franchise model, you can spend time developing your managers while building loyalty and trust with them.
Many car wash owners, for example, own several locations. They are clearly operating as absentee or semi-absentee franchise owners, and they are doing it successfully. Knowing that other business owners are achieving this should give you confidence that you can as well.
Closing Thoughts
Exploring the absentee or semi-absentee model can be an ideal choice for those looking to balance a day job with business ownership. This type of business and type of franchise ownership allows aspiring business owners to dive into franchise opportunities without the need for a full-time time commitment. By leveraging a strong management team to operate manager run franchise locations, individuals can experience the primary benefit of franchise business ownership: the ability to generate income while maintaining ample time for other pursuits.
Ultimately, whether you’re transitioning from a corporate role or seeking to diversify your investment portfolio, absentee franchise ownership or semi-absentee franchise ownership offers a flexible path to becoming a successful business owner. Consulting with a franchise consultant can provide valuable insights into the right business concept and help determine the best fit within this unique framework.
Are you interested in owning an absentee franchise? If so, please schedule a call here.
