Is Owning a Franchise Passive Income? | What You Should Know

Passive income is the talk of the internet these days, and everyone is trying to find ways to make more money without having to work more hours. We know that having a rental property is considered a form of passive income, but what about owning a franchise? Can you make money passively by owning a franchise?

In this blog post, we’ll explore what it means to have a passive income through owning a franchise and if it’s truly possible to make money in this way.

Answer To The Question Is Owning a Franchise Passive Income:

Whether you decide to open a Mcdonald’s, Starbucks, Dunkin’, or any other type of franchise, when it comes to getting everything set up it will take a lot of work upfront. You need to learn what it takes to run the business successfully and the standards each franchise location is held to. There is a lot of research that needs to be done as well. Once you figure this out though, you can put a management team in place, which will take care of a lot of the day-to-day tasks, giving you more freedom.

While there is still some work that you will have to do regularly, it is possible to make owning a franchise a form of passive income (kind of). You can make money while you sleep if you have the right team in place and if you’re monitoring the situation regularly.

What Is It Called When Someone Tries To Make The Franchise They Invested In Passive?

The right term is semi-absentee. This means that the owner is not present all the time but still monitors what is going on and provides some input when needed. This is stuff like being available for phone calls, approving big purchases, monitoring payroll, and more.

The most important thing to remember is that you can’t just purchase a franchise and then do nothing. You need to be involved in some capacity, even if it’s not as hands-on as you would be with a traditional business.

Semi-Absentee owners could still work up to 20 hours per week (sometimes way less), but this is a big change from the 60-80 hour work weeks that are common with small businesses.

What Are Some Other Factors You Need To Take Into Consideration?

The Quality Of The Franchise Itself

Many people have fallen under the trap of thinking that any franchise is a good investment because it’s a well-known brand. But you need to do your due diligence and not just invest in any franchise. You want to make sure that the franchise you’re getting involved with is something that has a proven track record of success. Some people have gone of their way to get a franchise that is in a high-growth industry, such as fitness or real estate, only to find out that the particular franchise they chose was not doing well.

Location Is Key

When you’re looking for a franchise to invest in, you want to make sure that the location is in a good spot. If the location is not ideal, it will be much harder to make a profit, no matter how well the franchise itself is doing.

You Need To Have Some Money Saved Up

Investing in a franchise is not a cheap endeavor. You need to have some money saved up so that you can cover the costs of getting everything set up. This includes the franchise fee, rent for the location, marketing costs, and more.

You also need to have some money set aside so that you can keep the business running if it’s not making a profit right away. It can take some time for a new business to start making money, so you need to be prepared for that.

Make sure you do the research into what franchise you want to invest in and that you have a solid plan for how you’re going to make it a success.

What Are The Different Types Of Franchises You Can Get Started With

There are different types of franchises you can get started with. Let’s dive into each industry and take a look at some of the different options you have.

Restaurant Franchises

There are many popular restaurant franchises that you can get started with. This includes fast-food franchises like McDonald’s, Burger King, Wendy’s, and more. There are also sit-down restaurants like Olive Garden, Chili’s, Applebee’s, and more.

Retail Franchises

There are many retail franchises that you can get started with as well. This includes popular stores like 7-Eleven, Dunkin’ Donuts, Subway, and more.

Gym Franchises

If you’re looking to get started with a franchise in the fitness industry, there are many options available to you. This includes popular gyms like 24 Hour Fitness, Gold’s Gym, and more.

Cleaning Franchises

One of the most overlooked industries when it comes to franchises is the cleaning industry. This includes companies like 1-800-GOT-JUNK?, Maid Brigade, and more.

Laundromat Franchises

Another industry that is often overlooked is the laundromat industry. This can be a very profitable business if done correctly.

As you can see, there are many different types of franchises that you can get started with. You must do your research and figure out which one is the best fit for you.

What Are The Pros and Cons Of Owning a Franchise As a Form Of Passive Income?

There are a few pros and cons of owning a franchise as a form of passive income. Let’s take a look at each side so you can make an informed decision.

Pros

You’re Getting Started With A Proven Business Model

One of the benefits of owning a franchise is that you’re getting started with a proven business model. This means that you have a much higher chance of success because the business model has already been proven to work.

You Have The Support Of The Franchise

When you’re owning a franchise, you have the support of the franchise itself. They will provide you with marketing materials, training, and more. This can make it easier for you to get started and run the business successfully.

There Is Brand Recognition

Another benefit of owning a franchise is that there is already brand recognition. This can help you attract customers and get them in the door more easily.

Cons

You’re On A Strict Schedule

One of the downsides of owning a franchise is that you’re on a strict schedule. The franchisor will dictate things like your hours of operation, what products you can sell, and more. This can be limiting for some people. Even if you’re a semi-absentee owner, if someone gets sick or something happens, you’re still on the hook.

You Have To Pay royalties

Another downside of owning a franchise is that you have to pay royalties to the franchisor. This is a percentage of your sales that you have to pay to them.

You Might Not Be Able To Make The Changes You Want

If you’re the type of person who likes to be in control and make all the decisions, owning a franchise might not be for you. This is because you might not be able to make the changes you want to the business.

How Can You Make Completely Passive Income From Franchises?

Now that we went over the fact that owning a franchise is usually semi-passive and not completely passive, you’re probably wondering how you can make it completely passive.

Stocks

The first way you can do this is by investing in the franchises you believe in. For example, if you believe in McDonald’s, you can invest in their stock. This will allow you to make money from their success without having to do any work.

The best part about this is you don’t have to limit yourself to just one franchise. You can invest in multiple franchises and diversify your portfolio. This will help you minimize your risk and maximize your returns.

Turning Your Restaurant Into a Franchise

Another way to make completely passive income from franchises is to turn your restaurant into a franchise. This is a great option if you have a successful restaurant that you’re looking to expand.

What you would do is create a blueprint of your business model and then sell it to other people who want to open up their own locations. This can be a great way to make money without having to do any of the work yourself. The way you would make money through this is with royalties on the income that the other locations generate.

Above all, you would need to have a very successful restaurant for this to be a viable option. Otherwise, people wouldn’t be interested in buying your franchise.

Conclusion

Now that you can see that franchises can be semi-passive, you might be wondering if it’s the right fit for you.

The best way to figure this out is to do your research and really think about which franchise you want to invest in. Once you’ve done that, you can make an informed decision about whether or not owning a franchise is the right fit for you.

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