Common Characteristics of Passive Franchises for Investors
10 Things every Investor needs to know about passive income businesses
Own a business/franchise where you don’t have to work full-time.
Looking for passive franchises or part-time business opportunities? Surprisingly, there are some interesting options in the “absentee” or “semi-absentee” business ownership space. While most franchises require owners that work full-time in the business, there are several options that allow passive or part-time owner options. With these options, you can earn income for your retirement or use the extra cash to invest in other pursuits.
The following excerpt from my book “Franchising Without Fear, Six Steps to Successfully Buying Your Own Business”, explains one of the first questions you should ask when considering a business:
“How active do you plan to be in your business?
Are you planning to keep your job and run the business part-time? Franchisors typically prefer that the franchisee act as the face of the business and is on-site running the day-to-day operations.
However, some franchises allow absentee or semi-absentee ownership. A semi-absentee or absentee business will permit you to work your current job until you can transition into the company full time. Many people keep their franchise as a side business and do both. Be sure to investigate your options. If you are looking for passive or semi-passive income, choose a franchise that is specifically set up to meet your goals.
Keep in mind, if you prefer a semi-absentee or absentee business, the options will be limited. You may need to hire someone else to manage the business on a day-to-day basis, which means additional staffing costs. Also, remember a manager will not have the same investment in building the company as you the owner will.” (Trish Benedik, Franchising Without Fear, 2019)
Common characteristics of passive and part-time business
If you feel a passive ownership business is for you, following are 10 common characteristics of passive and semi-passive businesses.
- The initial investment is typically higher than owner/operator concepts.
- The ongoing costs are higher because you are paying someone else to run the business.
- Multiple units offer an option to see faster results and scale the business.
- Owning a franchise absentee or semi-absentee can be a great way to build a legacy business to pass on to future generations.
- Many passive or semi-absentee business opportunities are emerging brands with a lower number of operating units, but higher potential for growth. Emerging brands also come with higher risk.
- ROI may vary depending upon the team running the operation, yet may have a positive effect because the team is experienced. The operators won’t have the learning curve of a new franchisee.
- Passive businesses are more of a long-term investment and most require a high net worth.
- There are multiple options, and you will want to investigate the opportunity. Your investigations should include talking with experienced owners, attorneys, and accountants. These professionals will help you with your due diligence before purchasing any business or franchise.
- Interesting options include vending, hair salons, health and wellness, fitness, pet care, and there is even a restaurant or two.
- You can make a difference, grow a legacy, and own a business you love without working 60 hours a week.
- BONUS: We work with several passive and semi-absentee options that are not franchises, they are business opportunities.
While running a business part-time or absentee sounds like a good solution, keep in mind It’s not for everyone
- Territories sell out quickly.
- Higher initial investment and high net worth requirements means higher risk.
- You will not have as much control over this type of business as when you are the owner/operator.
- There will be some work involved especially at the outset.
Contact Trish for more information and to assist you in your search for the perfect franchise fit
Keep following my Blog for more insights into fantastic franchise options. Remember owning a business is about matching your skills with the right business that meets your personal and professional goals. My 6-step process will guide you to the right business for you and get you introduced to opportunities that work for you.
What are you waiting for?
Trish Benedik owner of Select Franchise Consulting will help narrow your options and find the franchise that is the right fit for you saving you time and frustration. Our consultation will help you make an informed decision. There are thousands of options in franchising, find the one that is a good fit for your business and lifestyle goals.
Disclosure: Select Franchise Consulting/Trish Benedik/T A Benedik, LLC does not guarantee the financial performance of any franchise, licensed affiliate, or business opportunity. The decision to purchase a franchise, licensed affiliate, or business opportunity must be based on the buyer’s independent research and analysis. Select Franchise Consulting/Trish Benedik/T A Benedik LLC is not liable for any representation made by a franchisor and/or a franchisors employee, affiliate, or associate with respect to real estate, financial, operations, or marketing performance of the business being acquired.