In Today’s Newsletter:

• 🤔 What’s the Deal with “Semi-Absentee” Franchise Ownership

• 👔 Breakdown of the Pearce Bespoke Franchise Opportunity

• 📊 Fun Franchise Stat

What’s the Deal…

_{What’s the Deal with “Semi-Absentee” Franchise Ownership?}

I’m the type of guy that likes to dive right into controversial topics and not skirt the issue. Let’s address the elephant in the room: Semi-Absentee ownership.

Or the term most in franchising prefer to use today: “Semi-Involved” ownership.

Regardless of preferred terminology, the substance and seriousness of the issue is the same.

But first, let’s define our terms. What is “Semi-Absentee” ownership and how do most people think about it?

According to good ol’ Chat GPT, Semi-Absentee business ownership is defined as “a business model in which the owner is not required to be fully involved in the day-to-day operations of the business. Instead, the owner typically dedicates part-time hours to overseeing the business while relying on systems, processes, or staff (e.g., managers) to handle daily operations.”

Many in franchising refer to this model as “Managing the Manager” or as “The Executive Model.”

And despite what some in franchising might say, it’s possible.

The caveat? Like most things, it needs to be done the right way.

How to Semi-Absentee…The Right Way

Two quick important topics to consider…when considering whether or not you can successfully run a franchise as a semi-absentee owner.

1) The People

Anyone that thinks they’re going to a) just hire a manager they met through a job posting website and b) have that manager run their entire business…profitably…is sorely mistaken

Ryan Zink, Founder of Franchise Sidekick (a franchise advisory firm that I work as a franchise advisor) has 4 key elements he believes is necessary to run a franchise “semi-absentee,” and this is a well-respected dude within franchising who has run many franchises across different industries on this exact management model.

According to Ryan, Semi-Absentee ownership is possible (and a lot less of a headache) if you stick to, well, STIC: Hiring Your Manager Based On…

S - Skills - Does the person you’re hiring to run your business have the main skills necessary to drive this business forward?

T - Trust - Do you trust this person? Do you know them? Is this someone you know through another person you know, like, and trust?

I - Incentivized - Am I willing to pay this person enough to stick around and not quit on me? Am I willing to pay slightly above market rate on salary? Am I willing to provide profit-sharing or bonus structure - tying my manager to the profit-making incentive of the business? Am I willing to offer my manager the ability to earn-in equity over time?

C - Capacity - Is this the only “thing” that my manager is doing? Do they have the capacity to commit to running my franchise full-time?

Stick to STIC. If they have the skills, they’re someone you can trust, they’re properly incentivized to drive profit, and they have the capacity to run your franchise full-time, successfully executing semi-absentee ownership will be far more likely.

2) Revenue / Profit Potential Per Territory

Every territory eventually “caps out” at a certain point - the potential will likely max out at a certain amount of revenue

Question to Ask Yourself (and the franchise): Based on my due diligence, how many territories do I need in order to drive enough revenue to pay a manager to run the day-to-day operations of my business?

Example: If you hear after talking to existing franchise owners, for example, that the average revenue per territory of the franchise you’re investigating is $250,000 at a 20% EBITDA margin, there may not be enough topline revenue to hire a manager AND produce a profit

• i.e. 20% of $250k is $50,000 in EBITDA…which is essentially before paying off business loans (debt service), taking out taxes, and more

• AKA…Probably. Not. Enough. To Pay. A Manager.

• For you internet police, yes, there are obviously a million other important considerations regarding the financial potential

Territory availability: Is there enough territory availability in your desired market to grow revenues (and profit potential) large enough to provide for a manager?

This is not an exhaustive list - it’s important that you have either a) the capital, the management experience, and more to successfully run your franchise as a semi-absentee owner.

-Christian Dadulak, Franchise Advisor

Franchise Deal of the Week

Brand Story: 

“The First & Only Mobile Fashion Franchise”

Pearce Bespoke is a mobile, events-based concept that goes to the customer first and can help anyone “from the boardroom to the boy’s club” get fitted and purchase their custom suit fit.

Too wordy? Pearce Bespoke sells custom suits. To who? See below.

Industries They Help:

• Weddings

• Law Firms

• NIL

• Country Clubs

• Realtors

• Financial Advisors

• Cigar Lounges

• Corporations

Fun Facts:

• Founder of Pearce Bespoke, Nathan Pearce, was on Season 6 of Shark Tank, and left with a deal with Mark Cuban for a different business

Highlights:

• No Industry Experience Required

• 100% Mobile Concept = No Retail Storefront = No Lease, No Landlord

• Minimal Staffing - Team of 1099 Salespeople

• Low Investment

• Large Addressable Market (Big Potential Client Base)

• Instant Cash Flow - Customer Pays Up Front

• Event Based Concept = Convenience & Flexibility

• Fun, Feel Good Business

By the Numbers:

Minimum Financial Requirements…

(You need to meet these requirements at a minimum to be considered for this franchise)

Net Worth - $200,000

Liquidity - $50,000

Item 7 - Estimated Initial Investment Range

This range typically contains everything to get the business up and running, including the franchise fee and 3 months of working capital

Investment: $29,664 - $120,765

Approximate Down Payment w/ SBA Loan: Most banks we see currently funding franchise businesses require at least a $100,000 loan; in this case there are other strategies we might want to consider unless additional territories are purchased

Fees:

• Royalty: 10% Gross Sales

• Brand Fund: 2% Gross Sales

• Franchise Fee: $49,500

Total Locations Open: 38+

Number of Franchisees: 20+

Employees Needed to Start:

• Depends on ownership structure

• If Manager-led…

  • 1 Sales Manager

  • 2-3 1099 Commission-Based Salespeople

Territory: 200,000 population per territory

Franchise Stat of the Week

Anytime Fitness is the FIRST franchise to open in Antarctica, making it the only franchise open on all seven continents ‼️

Reply to this newsletter or schedule a meeting with me via the link below…all at no cost to you, ever. All of my help is 100% complimentary - I get paid a referral fee by the franchises if you buy into their brand.