Different Franchise Ownership Models

Join along as Phil Harvey from Prosperity Services talks about the 3 different franchise ownership models that you should know of. In this video, you will get a high-level brief overview of the owner-operator model, the semi-absentee model, and the investor model.


“Hi, Phil Harvey with Prosperity Services.

I’d like to take a moment and address a question and perhaps a stereotype that we hear more often than not, and that has to do with a franchise that requires that the owner be there all the time, and in fact, there are three distinctly different models that I’ll describe to you very briefly.

Model one is the most familiar, which is what I described. It’s an owner-operator model. If the lights are on, doors are open, and customers are flowing, and if you have employees that are engaged, then you are there. You are active; you are leading; you are involved.

The secondary model is called the executive model, or semi-absentee. And that’s where you’re spending, give or take, between 10 and, say, 25 hours on the business per week. You’re empowering a manager, and so you’re basically managing a manager. You’re doing things that are maybe, we’ll call, more ‘working on the business than in the business’. You’re focused on growth, perhaps scale, or solving larger issues that will affect the long-term sustainability of the business.

There’s also a third model. And that third model is called an investor model. And it can also be called passive or even called the absentia model. That’s where you basically retain a managing agent. They could be a third party, it could be the brand itself, and they are empowered to fulfill all of the obligations that you have to operate the franchise.

(In this model) you may be getting a briefing once or twice a month on key issues for 30 minutes to an hour, or you might be consulted on major capital, expenditure issues, things of that nature. I hope that’s helpful to you and gives you greater clarity about the models. Of franchise ownership.”

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Phil Harvey

Phil Harvey, franchise consultant and founder of Prosperity Services, is an accomplished franchise industry veteran and trusted franchise advisor. He consults with first-time and serial entrepreneurs alike, helping them find, evaluate and select the right franchise to achieve their goals.