Opinions expressed by Entrepreneur contributors are their very own.
For those who’re new to franchising, the abundance of data can appear overwhelming. How have you learnt the place to begin? You could have a generalized understanding of franchising, however a part of performing due diligence means transferring past the final and entering into the nitty gritty.
With regards to understanding completely different franchise fashions, there are a number of classes to pay attention to. First, you may need to perceive the variations between “brick-and-mortar” and “service-based” franchises.
Location-based (Brick-and-Mortar) companies
Brick-and-mortar franchises require important upfront funding, significantly for actual property. Establishing a bodily storefront or workplace area can contain excessive prices, and discovering the precise location is essential to success. Consequently, these companies typically 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, enlargement turns into extra possible, with extra areas benefiting from the prevailing model presence and operational expertise. Many of those companies additionally combine superior expertise options to boost buyer engagement and streamline every day operations.
Nevertheless, the reliance on a particular location introduces dangers. Elements resembling native competitors, foot site visitors, and financial circumstances can tremendously 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 supply a number of benefits, making them a lovely possibility for potential franchisees. They sometimes require a decrease preliminary funding in comparison with brick-and-mortar companies, have a faster ramp-up time, and are extremely scalable by means of territory enlargement. With built-in expertise capabilities, these franchises can streamline operations and enhance buyer expertise. Moreover, as a result of providers are carried out on the buyer’s location, they carry negligible location threat, and lots of supply larger recession resistance by offering important providers.
Throughout the broad class of service-based franchises, two main 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 entails offering one-time, high-value providers, with income tied to particular person tasks. However, a garden fertilization firm represents a subscription-model franchise, the place clients pay for recurring providers, guaranteeing a gentle income stream. Whereas each varieties fall underneath the service-based umbrella, their operational fashions, buyer relationships, and income constructions range considerably. This distinction permits franchisees to decide on a mannequin that finest aligns with their targets, monetary capability, and market circumstances.
Challenge-based mannequin
Think about a buyer in want of a brand new roof for his or her residence – 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. Subsequently, your buyer base isn’t depending on recurring clients. Whereas this will likely not sound like a superb factor, there are advantages to this mannequin.
Typically, most of these companies can rent contractors based mostly on the wants of a specific mission. Reasonably than having a big worker staff readily 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 preserve comparatively decrease overhead prices.
That stated, pay attention to your strengths. The project-based mannequin requires a extra sales-oriented method. Since these are high-ticket transactions, the salesperson (probably you because the proprietor, until you’re hiring a common supervisor) might want to work together with the shopper 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 residence roofing? Business? The bigger the tasks, the extra sales-savvy you may have to be. Whereas this could result in a a lot bigger and extra worthwhile enterprise, an understanding of B2B is very helpful.
Additionally value noting: whilst you probably will not have many recurring clients, there are alternatives to acquire new clients by means of referrals from complementary service suppliers. It will require extra upfront time and advertising effort, however it could 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 therapies, and residential or industrial portray.
Associated: The One Issue the High Franchises of 2025 Have in Frequent
Subscription-model
Alternatively, think about clients who require lawn-fertilization providers. That is sometimes a recurring service which may be wanted bi-monthly (if no more often). Every service is low-ticket, however as a result of ongoing nature of those providers and the flexibility to stack many shoppers every day, this will also 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 larger fastened prices. Garden care firms require constant labor workers, tools (sprayers, spreaders, vans, trailers, and so on.), and doable in-office personnel along with your common supervisor. These prices add up.
Nevertheless, dissimilar to roofing, which depends on sturdy gross sales expertise, clients for garden care could not even discuss to a salesman. With built-in expertise (which is more and more frequent in these franchises), your clients could merely ebook on-line or request digital quotes from a nationwide name heart. One other value-add to the subscription-model is that your buyer base is actually limitless. Much less time will probably be spent discovering clients and constructing out every mission to match their wants. A garden care firm provides a particular set of providers 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, youngster enrichment, and senior care.
When you’ll definitely be taught classes as you go, in franchising particularly, it is necessary to not put the cart earlier than the horse. The franchise mannequin you select in the beginning of your franchise possession journey may be the distinction between success and failure. Making certain a appropriate match upfront is important for longevity in your future enterprise.
