The Franchise Owner Time-Money Pendulum

As a franchise shopper, it is critical that you understand which ownership model best aligns with your expectations. Not every franchise offers all three ownership models, and getting stuck in a business arrangement that requires more time than you can commit can be detrimental to the growth of the business.

Owner-Operator

As an owner-operator, you’re heavily involved in the day-to-day operation of your business. You’re typically on-site, managing staff, ensuring quality control, and interacting with customers. This hands-on approach often leads to lower labor costs and improved customer service, but it can be time-intensive and restrict your ability to scale the business.

Semi-Absentee Ownership

As a semi-absentee owner, you’re less involved in the daily operation. This model allows you to maintain other employment or business interests while owning the franchise. You hire a manager or management team to oversee the day-to-day and focus your time on strategic decision making.

Executive Model

Executive franchise owners typically own multiple franchise locations or territories, requiring a higher level of investment. Your focus is growing the business rather than working in the business. It entails networking, relationship building, and team leadership. You will leave the specific service delivery to the team you’ve hired.

The Time-Money Pendulum

The amount of time you’ll need to devote to your business and the amount of money you’ll need to invest in your business operate on a pendulum. The more money you invest in your business, the less time you’ll have to dedicate, and vice versa. Analyzing your position on the time-money pendulum is a vital part of your franchise exploration.

Here is a little bit more about how the pendulum works:

As a full-time owner operator, you will manage the day-to-day operation yourself, eliminating the need to hire and pay a General Manager. Since you’re devoting a lot of sweat-equity, you don’t have to deploy as much capital. This is an example of a high-time, low-money franchisee.

As a semi-absentee franchisee, you will oversee the business at an executive level, but will be less involved in the day-to-day operation. This level of oversight will usually require you to hire a General Manger to oversee the daily operation. Your business will take longer to become profitable due to the added expense of paying your manager a salary. Consider giving your manager equity in the business or performance-based incentives. It is critical that they buy into your vision and are fully invested in the success of your business. This is an example of a high-money, low-time franchisee.

New franchisees rarely fall on the extreme ends of the time-money pendulum. The exact combination of available time and money varies greatly. Finding your unique place on the time-money pendulum is a balancing act—you may want to spend slightly more money to save a little bit of time, or slightly more time to save a little bit of money.