For many individuals, the idea of expanding their wealth through franchising is a tempting one. The thought of gaining financial independence and being their own boss is something that many people want to achieve. And while franchising is a great way to do this, some people only look at franchising as an investment opportunity. This is why the passive or hands-off franchise may be an excellent option for these individuals.
As the name suggests, a hands-off franchise is one that you’ve invested in but have delegated the responsibilities and day-to-day operations to someone else. And while these owners, the franchisees, might not be involved in a day-to-day physical sense, they provide the funding and financial foundation, receive the profits generated by the franchise location, and pass along royalties to the franchisor.
Now that we’ve established what a passive franchise is, it’s time to take a closer look at why this is an attractive option. Some people may have well-paying jobs and simply don't have the time to commit to a brand-new business venture, and don’t want to give up the security of a steady paycheck and benefits. Others may lack the experience or interest to run a business day-to-day and prefer to pay an experienced manager or team to do that. There are also those who are already investors in other businesses and want to add another to their portfolio. A passive franchise allows them to reap the financial benefits from the profits while delegating the responsibilities to the employees of the franchise.
There are different roles that someone who chooses to invest in a passive franchise might decide to take. Here are a few examples.
Delegating to the Franchisor - The success of a business that decides to franchise itself has already been proven. So, in this scenario, the franchisor is responsible for the day-to-day operations, and the owner has little, if any, responsibility aside from the financial aspects.
Managing the Manager - In this scenario, the franchise owner hires a manager to run the business. The owner’s role, apart from the financial aspects, is to supervise the manager and have oversight over their responsibilities.
Investing in a Management Team - In this scenario, the franchise owner and a group of investors hire a management team to run the daily operations of the business. Usually, this occurs when a group of individuals decide to invest in a business together.
If you’re looking for businesses in which to invest, and you want to play a passive role in the day-to-day, FranSave can guide you to exciting options while saving you time and money. For more information on the opportunities that await you, visit us at fransave.com
This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your jurisdiction. Franchise offerings are made by Franchise Disclosure Document only.