In The News

Is Absentee Ownership of Franchises the New Franchising Trend?

Mar 13, 2012

Some signs point to rise of absentee ownership of franchises, pros buying franchises while keeping jobs

FranNet of San Francisco President Gordon Dupries. From FranNet website.

In franchising, trends are coalescing to form what could be the next large-scale movement in the industry: absentee ownership of franchises. Or, as franchise owners themselves call it, “manager-run franchises.”

The developments:

• Skilled, experienced professionals are leaving the corporate world and often turning to franchising to make a living.
• The economy is still bad, and Social Security and retirement funds look shakier than ever, so people are trying to shore up their economic futures as much as they can by changing what they invest in.
• The franchising industry is yielding more and more relatively inexpensive, service-oriented franchises that don’t require an owner to run the business every minute of every day and thanks to the sagging job market, there are quality hires to help manage franchised businesses.
• Prospective business owners can tap into retirement funds for start-up capital that was once unavailable to them and 401k rollovers to finance franchise startups are now one of the most common funding sources.

It all adds up to people who already have jobs pursuing franchise ownership as an additional source of revenue that doesn’t require full-time time investment. And these owners aren’t necessarily gravitating to food concepts, either; they’re exploring the full spectrum of service-based and lower-investment franchises, including child services, day spas, hair care and restoration businesses.

“Because a lot of the people we work with are corporate veterans, they understand how to manage employees by delegating responsibility. For some of our clients, that comes as second nature,” says Jania Bailey, FranNet’s president and chief operating officer. “So it makes sense that they’d want to buy franchises but not necessarily have a hand in every aspect of the business’ day-to-day operation. And that’s fine. You don’t have to do that to be a successful franchise owner.”

When you hear “absentee owner,” the image of a venture capitalist in a three-piece suit might enter your head, but the reality doesn’t match the stereotype. Recently, FranNet of San Francisco President Gordon Dupries closed a pair of multi-unit massage business deals with highly educated Bay Area women with corporate experience and young children.

They told Dupries they were interested in home-based franchises they thought would give them the flexibility to work while taking care of their kids. Dupries told them even home-based businesses would require them to leave the house to meet with clients and spend plenty of time on the phone — not exactly what they were looking for. Dupries suggested they buy massage franchises they could hire managers to run. That’s what both clients did.

“Clients ask me if it’s possible to own a franchise business, or more than one, while holding down a full-time job,” Dupries says. “I tell them, ‘It’s not easy, and don’t think for a moment that you won’t be involved at all, but yes, it is doable.’”

One of the clients, he said, has an MBA from Harvard — demonstrating the education level of people attracted to franchising these days. “If she can’t do it,” Dupries says, “we’d better all hang up our spurs.”

For nearly 25 years, FranNet, based in Louisville, Ky., has been one of North America’s leaders in matching franchisees with franchise companies. FranNet consultants use a specific profiling and consultative process to determine a business model unique to each client’s goals, skill sets and interests, and have matched thousands of happy entrepreneurs to rewarding small business opportunities. If you think you’re interested in a manager-run or any other kind of franchise opportunity, see www.frannet.com.

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