Opinions expressed by Entrepreneur contributors are their very own.
Should you’re new to franchising, the abundance of data can appear overwhelming. How have you learnt the place to start out? You could have a generalized understanding of franchising, however a part of performing due diligence means transferring past the final and moving into the nitty gritty.
Relating to understanding completely different franchise fashions, there are a number of classes to pay attention to. First, you will need to perceive the variations between “brick-and-mortar” and “service-based” franchises.
Associated: Contemplating franchise possession? Get began now to seek out your personalised checklist of franchises that match your way of life, pursuits and finances.
Location-based (Brick-and-Mortar) companies
Brick-and-mortar franchises require important upfront funding, notably for actual property. Establishing a bodily storefront or workplace area can contain excessive prices, and discovering the correct location is important to success. Consequently, these companies usually expertise an extended ramp-up interval earlier than reaching profitability.
Regardless of the excessive preliminary prices and prolonged setup time, brick-and-mortar companies are identified for his or her scalability. As soon as a profitable mannequin is established at a single location, growth turns into extra possible, with further places benefiting from the present model presence and operational expertise. Many of those companies additionally combine superior know-how options to reinforce buyer engagement and streamline each day operations.
Nonetheless, the reliance on a selected location introduces dangers. Components similar to native competitors, foot visitors, and financial circumstances can drastically affect the success of the franchise. Moreover, in comparison with service-based fashions, brick-and-mortar franchises are typically much less recession-resistant, as discretionary spending tends to lower throughout financial downturns.
Associated: See Which Manufacturers Topped Entrepreneur’s forty sixth Annual Franchise 500
Service-based companies
Service-based franchises provide a number of benefits, making them a sexy choice for potential franchisees. They usually require a decrease preliminary funding in comparison with brick-and-mortar companies, have a faster ramp-up time, and are extremely scalable by territory growth. With built-in know-how capabilities, these franchises can streamline operations and enhance buyer expertise. Moreover, as a result of companies are carried out on the buyer’s location, they carry negligible location danger, and lots of provide greater recession resistance by offering important companies.
Throughout the broad class of service-based franchises, two major fashions emerge: project-based and subscription-model franchises. As an example, think about a roofing firm for instance of a project-based franchise. This mannequin includes offering one-time, high-value companies, with income tied to particular person tasks. Alternatively, a garden fertilization firm represents a subscription-model franchise, the place prospects pay for recurring companies, making certain a gentle income stream. Whereas each sorts fall underneath the service-based umbrella, their operational fashions, buyer relationships, and income buildings fluctuate considerably. This distinction permits franchisees to decide on a mannequin that finest aligns with their objectives, monetary capability, and market circumstances.
Associated: Here is how we decided our annual Franchise 500 rating and what we realized from the information.
Mission-based mannequin
Contemplate a buyer in want of a brand new roof for his or her dwelling – it is a high-ticket expense. Barring unpredictable climate like excessive winds or hail, they probably will not be shopping for a brand new roof greater than as soon as each decade or extra. Due to this fact, your buyer base will not be depending on recurring prospects. Whereas this will not sound like a great factor, there are advantages to this mannequin.
Usually, these kinds of companies can rent contractors based mostly on the wants of a specific challenge. Quite than having a big worker staff available ready for purchasers to purchase your product, a project-based franchise will wait till an order has been positioned earlier than hiring contractors to carry out the service. You could solely want your self and an in-office employee to handle tasks. This presents a variable price mannequin that implies that the franchisee can keep comparatively decrease overhead prices.
That mentioned, be aware of your strengths. The project-based mannequin requires a extra sales-oriented strategy. Since these are high-ticket transactions, the salesperson (probably you because the proprietor, until you’re hiring a basic supervisor) might want to work together with the client earlier than the service is carried out to construct belief and credibility. Moreover, think about what sorts of tasks you have an interest in taking up. Is your focus residential dwelling roofing? Business? The bigger the tasks, the extra sales-savvy you will have to be. Whereas this may result in a a lot bigger and extra worthwhile enterprise, an understanding of B2B is very helpful.
Additionally value noting: when you probably will not have many recurring prospects, there are alternatives to acquire new prospects by referrals from complementary service suppliers. This can require extra upfront time and advertising and marketing effort, however it might repay in spades when you proactively construct this into your course of.
Different “project-based” franchise examples embody: restoration, fencing, siding, home windows, transforming, flooring, window remedies, and residential or business portray.
Associated: The One Issue the High Franchises of 2025 Have in Frequent
Subscription-model
Alternatively, think about prospects who require lawn-fertilization companies. That is usually a recurring service which may be wanted bi-monthly (if no more steadily). Every service is low-ticket, however because of the ongoing nature of those companies and the flexibility to stack many shoppers each day, this can be a extremely worthwhile and sturdy franchise mannequin.
In contrast to the roofing instance above that may depend on contractors, a subscription mannequin can have greater mounted prices. Garden care corporations require constant labor workers, gear (sprayers, spreaders, vans, trailers, and so forth.), and potential in-office personnel along with your basic supervisor. These prices add up.
Nonetheless, dissimilar to roofing, which depends on sturdy gross sales expertise, prospects for garden care could not even speak to a salesman. With built-in know-how (which is more and more frequent in these franchises), your prospects could merely e-book on-line or request digital quotes from a nationwide name middle. One other value-add to the subscription-model is that your buyer base is actually limitless. Much less time shall be spent discovering prospects and constructing out every challenge to match their wants. A garden care firm gives a selected set of companies that may be templatized and repeated as a plug-and-play service.
Different “subscription-model” franchise examples embody: irrigation, pest management, pool upkeep, HVAC, window cleansing, restaurant hood cleansing, parking-lot upkeep, pet grooming, baby enrichment, and senior care.
When you’ll definitely study classes as you go, in franchising particularly, it is essential to not put the cart earlier than the horse. The franchise mannequin you select originally of your franchise possession journey might be the distinction between success and failure. Guaranteeing a appropriate match upfront is significant for longevity in your future enterprise.
