The Pros and Cons of Different Franchise Models

Wondering which franchise model is right for you? We’ve analysed the pros and cons of three of the most common franchise styles so you can see which kind of opportunity is likely to suit your lifestyle and goals.

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Searching for the perfect franchise can be overwhelming. As well as the sector you’re looking to operate in; you’ll also have to decide which type of franchise you’d like to run. We’ve already explained the three primary types of franchise systems, but today we’re going to be breaking down the most common franchise models: fixed premises, van-based/mobile and home-based.

All three models can be incredibly rewarding to investors and give the chance to start a business based on what works for your lifestyle and goals. We hope this unbiased analysis of the three model common franchise models will help you get a better idea of the kind of franchise you’d like to run.

Fixed premises franchise

Pros

Many of the world’s most recognisable franchises, from McDonald’s to Subway to Kumon to FastSigns, operate from fixed premises. Customers can pop in and visit to take advantage of their products and services, meaning this kind of franchise is likely to attract a steady stream of new clients from passers-by. As a result, the profit potential from this type of opportunity can be enormous.

If you invest in this type of franchise, you’ll have a set office, retail or other customer-facing space where you can work. Some people find it easier to work this way, as it allows them to separate their work and home life. And if you’re interested in growing a business with multiple locations or employing plenty of staff, this is likely to be the franchise model for you.

Cons

The fixed premises franchise has its fair share of downsides. The main one is that it can be expensive, particularly if you’re investing in pricey gym equipment for a fitness franchise or buying into an international fast-food franchise. It’s not unusual for a fixed-premise franchise to have a franchisee fee of £1 million+, though there are plenty of more affordable options too.

Other drawbacks include set opening hours, which are usually decided by the franchisor. If you want more flexibility, you’ll have to employ and train staff to staff your business, costing time and money. You’ll also have to cover fixed monthly overheads, such as rent, electricity and wages, even at times of low income.

In addition, fixed premises franchises won’t always benefit from passing customers. A prime location can be costly and, at the start of your franchise journey, your budget probably won’t stretch that far. Unless your branch is located on a bustling high street or centre of a residential or shopping area, you’ll have to work harder to make sure people know where to find you.

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Van-based or mobile franchise

Pros

A van-based franchise or a mobile franchise (where most of your work is done in clients’ homes or workplaces) is a popular choice for many entrepreneurs. You’ll travel your area carrying out work, which can range from automotive services to foot care, and complete any business management tasks in the comfort of your own home.

If you want to expand by recruiting staff members, most van-based franchises can easily be scaled up with virtually no limitations other than your budget.

This fast-faced franchise style is excellent for entrepreneurs who like to be on the go. You’ll be free to hop from job to job and set your own schedule, squeezing in as many or as few jobs as you like throughout your working week.

Cons

Though not as pricey as a fixed premises franchise, you’ll still need to invest a sizeable amount of money in starting a van-based franchise. Let’s say your chosen franchise requires you to purchase and cover the cost of fitting out a fully-liveried van - you’ll need to factor this investment into your plans.

However, most established franchises have excellent links to high street banks, meaning you may be able to fund up to 70% of your investment with a business loan.

It’s also worth considering how much of your day is likely to spend on the road when running a mobile/van-based franchise. If you’re prone to serious road rage and find the idea of spending lots of your time in a vehicle off-putting, this might not be the opportunity for you.

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Home-based franchise

Pros

A home-based franchise is an excellent idea for many people. You can work from the comfort of your own home in a range of sectors, whether you fancy running a B2B franchise or a property franchise. It’s often the cheapest kind of franchise, as there are no overheads to consider and can often be run using the laptop or computer in your home.

Here are just some of the types of people it’s likely to suit:

• Parents who struggle to find a career that fits with their childcare needs

• People with physical/intellectual disabilities or chronic health conditions who find office working doesn’t suit their unique needs

• Those who live rurally and don’t want to commute or move to run a business

• Those seeking a better work/life balance

• People who don’t thrive working under the 9-5 structure

When running a home-based or remote business, you’ll be free to organise your day in the way that suits you best. Even if your franchise requires you to be on call or contactable by email during certain working hours, you can multitask. There’s nothing to stop you answering emails or calls while you watch TV, hit the gym or play a round of golf.

Cons

While a home-based business sounds like perfection for many, it doesn’t come without its drawbacks. Here are some of the downsides you might want to consider before taking the plunge.

• Your work/home life boundaries could become blurred - It can be hard to switch off without the mental shift of entering and leaving the office. Make sure you’re strict with yourself about enforcing the boundaries between work and downtime; when you’re not working, don’t keep checking your emails or sneaking in admin tasks.

• You may have to work harder to find new customers - Without a visible premise that can attract passing customers, you could find it harder to keep a steady stream of customers coming your way. Most franchises will offer a comprehensive marketing support package or training to keep your new business prospects healthy.

• You could feel isolated - If you’re extroverted and love interacting with colleagues and customers, a home-based business could make you feel isolated. However, there are lots of remote franchises that allow you to interact with customers outside of the office, by visiting their homes or welcoming them to yours, meaning you’ll still get the face-to-face or virtual interaction you thrive from.

Choosing the right franchise for you

As you can see, there are plus points and drawbacks associated with every type of franchise. Our aim here isn’t to suggest that one type is better than the other. We believe that an open, honest analysis of each franchise business model will help you make the best choice for your circumstances, no matter what’s on your tick-list of requirements.

If you’re looking for more inspiration, check out our other articles. We upload informative content daily that’s designed to help you make sense of the wonderful world of franchising.