Franchise 101 - The differences between a home service and brick and mortar franchises - brought to you by MyPerfectFranchise.Net

[MyPerfectFranchise.Net]

• #1

Hey everyone,


It’s time for my monthly post about franchise ownership. Today I want to take a dive into the differences between the 2 main business models in franchising. Service based businesses and Brick & Mortar based businesses.

Before I get get going though, a little football talk...How bought them Cats!!! 6-1 with the only loss being respectable one against #1 UGA. Huge W's over UF and LSU...with the downside of the LSU win costing Ed O his job. That's too bad as Ed O was great TV and a crappy head coach. Anyway, the Cats have a real opportunity to win out and play in a HUGE bowl....what a year!

Ok, onto business as it is not nearly as fun to talk about my beloved Longhorns. All I will say is man, we sure do look SEC ready! ha!


Ok, here we go.....

Most people are very familiar with brick and mortar franchises. They are everywhere you look. McDonalds, Five Guys, Orange Theory Fitness, Supercuts, Massage Envy etc… those are all examples of brick and mortar franchises. Some of the characteristics that come with this model are:

• Retail footprint needed (usually Class A)
• Higher start-up costs ($200k – $1MM+)
• Business opens 6mos – 12mos after purchase
• Customer acquisition typically through digital marketing, little to no outside sales
• Owners role is Semi-Absentee typically. Meaning, they start off by hiring a GM to run the day to day. Owner will focus on back office and scaling initiatives (typically scaling by adding multiple locations of same business)

One last thing about brick and mortar to keep in mind is that due to Covid, commercial real estate is softening significantly. Price per square foot is going down and Tenant Improvement (TI) dollars haven’t been this good in a long, long time. At the same time have seen an increase in building material costs (much due to Covid regs reducing manufacturing capacity) but costs are starting to slowly regress back to norm.



Service-based businesses are a little less known than brick and mortar just due to the fact they don’t typically have a retail storefront and sometimes not office space at all. Think of all the services you need at your home…painting, maid service, restoration, home health, those are all service-based businesses. Here are a few of the characteristics associated with service-based franchises:

• Little to no office space needed – and certainly not retail Class A.
• Business opens immediately after training - Little to no build out costs or time
• Start-up costs typically pretty low ($100k - $200k, unless significant equipment necessary)
• Customer acquisition through outside sales, community focused events (chamber)
• Owner’s role can be semi-absentee or full time, depending on the franchise (some franchisors are very adamant that they want full time owner’s until business matures).
• Typically employ more people (or 1099) and typically blue collar work force

Service-based businesses have boomed since Covid hit. Reason being, we are all living in our homes more. Some are improving their current home rather than buying a new one as well. It all lines up to people using home-based service franchises a ton more right now.



Hopefully this was of value. As always, feel free to post comments and I will respond.