Franchise ownership a second source of income: Franchisees keeping their day jobs
Franchisees are increasingly hanging onto their day jobs even after they open their businesses.
Sandeep Sheth has a good job as a Project Manager, but he’s lately been feeling like he could use an additional source of income and have his money work for him. So he’s opening a Franchised Nail salon.
But Sandeep doesn’t plan to quit his IT Project manager job, nor does he plan to master the art of Nail design. Instead, he’s going to hire a manager to run the operation while he continues working.
In fact, he said he chose Nail Saloon in part because “I was seeing other franchises that would make me quit my job, and that was a bit of a drawback.”
Now a day many franchises owners are starting a franchise business, hire a full-time manager and work remotely and keep unrelated, full-time jobs on the side. Franchise experts say there’s been a recent uptick in interest in this type of arrangement among owners who hope to both generate a second income stream and to hedge their bets in case of layoffs in their industry.
We are meeting several of our client that wants to own Semi-passive to Passive franchise ownership. Many of these individuals generally fall into one of three categories: Some are unable to find jobs but want to keep their options open in case they do get an offer. Some are consulting, and want to supplement work that can be less than steady. And others, like Sandeep, are employed and want to make money on the side.
Sandeep said the salon should generate an average of $40,000 to $50,000 net income after it gets up and running, according to the franchise disclosure documents.
“Franchising appealed to me because they have a proven model,” he said. “If you can execute your model, you’ll be successful.”
Two full-time jobs
Not all franchisors are willing to accommodate the set-it-and-forget-it approach. As Semi-absentee model offers additional income it is lesser then owning as fully owner operated model. As a semi-absentee you will need to hire a full-time manager and their salary is coming out of profit.
As the economy is booming and the unemployment rate is tightening, there are several people considering. There are several franchisors are offering semi-passive to fully passive model and it is a matter of finding the right MATCH between individual’s goals to Franchisor’s offering.
Managing from afar
Although the practice may boost income, attempting to run a business and work a full-time job simultaneously gives rise to obvious challenges. Small Business Administrations and SCORE always point that all small business is a full-time job or even more than that. Having a business on top of regular job can be challenging and the potential candidate must have strong time management skills to juggle time between job and franchise ownership.
There are clear advantages and disadvantages to starting a business while employed. But as long as you can reasonably manage both, I would have to give the slight edge to retaining employment while starting a business.
There is a study that suggests entrepreneurs who start a business while still employed tend to do better than those that don’t, but these results might be suggestive of a hidden variable, such as risk aversion, that leads both to this decision and to entrepreneurial success. Personally, I went the route of starting my business on the side while still working as a full-time employee elsewhere. It’s difficult but doable.