When you’re looking into starting a franchise, it’s important to select a model that matches your business goals, personal skills, and desired level of involvement. The owner-operator and management franchise models are two common choices.
Recognising these differences and evaluating your own abilities and needs can greatly impact your success and fulfilment as a franchisee. Choosing between an owner-operator and a management franchise relies on various factors such as your preferences, capabilities, and financial commitment. Paul Edwards, Managing Director of GreenThumb, discusses the two concepts to help you determine which might be the best match for you.
Owner-operator franchise
The owner-operator franchise model could be an appealing choice for prospects looking to change their career and start up a business without the risks of entrepreneurship. In this setup, you would own and run your franchise location, enjoying the autonomy of business ownership alongside the structured support that franchising provides.
With the backing of the franchisor, you’ll be equipped to effectively manage and expand your business, fostering a financially promising and fulfilling career. Your involvement will be hands-on, as you’ll be actively engaged in daily operations, oversee service delivery, manage staff, and ensure customer satisfaction.
The owner-operator franchise model combines entrepreneurial independence with structured support, offering a robust opportunity for many aspiring business owners. It leverages brand recognition, comprehensive support, reduced risk, operational control, and a supportive community, ideally suiting those who prefer direct involvement in management and direct interaction with the business and customers.
There is usually a lower initial investment for an owner-operator franchise model, as these franchises often need less capital upfront in contrast to management franchises. This is because they involve smaller-scale operations or start-ups with less staff, but the opportunity to grow the business themselves is huge.
As a franchisee, you will likely forge strong personal connections with your customers, boosting customer loyalty and enhancing your business’s reputation. You will also have complete oversight over all business aspects, from staffing to customer service, giving you direct control over your operation.
Management franchise
When a management franchise is awarded, the franchisee is expected to oversee its operation thoroughly to ensure success. While not involved in daily tasks, the franchisee’s role is pivotal in both business growth and management, adopting a supervisory role that focuses on the bigger picture. At GreenThumb, this approach is preferred, seeking individuals who can not only manage and enhance a team but also, in cases of resale, expand the business further.
A management franchisee typically immerses themselves in all aspects of the business to thoroughly understand its operations and identify best management practices. This immersion often includes a significant period, sometimes up to a year, of working within the business before transitioning to focus on strategic management. It is essential for franchisees to align with the franchisor’s vision and strategy, as these are fundamental to the franchise’s proven business model.
Furthermore, management franchisees are expected to learn how the business operates at every level. For instance, it’s well-known for a McDonald’s franchisee to perform each role within the restaurant before progressing to managerial or ownership roles. Such hands-on experience is crucial across many management franchises, requiring deep engagement with daily operations before transitioning to strategic roles.
A management franchise is ideal for those who prefer a strategic rather than operational role or for investors seeking to broaden their portfolios without the commitment to daily business responsibilities. These franchises are also well-suited for resale due to their operational structure, allowing new owners to profit from the outset if the business is already successful.
Success in a management franchise model does rely significantly on the competence and dependability of the management team and you might find that you have less direct control and feel somewhat detached from daily customer interactions and immediate business activities. Typically, there’s a higher initial investment required for a management franchise, especially if it’s a resale of an established business.
Understanding your own goals, capabilities, and expectations is crucial in choosing the franchise model that best matches your entrepreneurial ambitions. Whether you opt for an owner-operator franchise or a management franchise, each provides a route to business success with a level of security that is rare in other entrepreneurial endeavours.
