Choosing a Service Franchise
By Kerry Pipes
Anyone seriously considering the purchase of a franchise will ultimately have to decide if a "service" franchise or a "retail" franchise is a better fit. It's an important distinction in terms of both entry requirements and operational realities, and it's a decision that can determine your ultimate effectiveness as a franchise operator.
First, a basic summary of some typical service franchise opportunities available today, here are just a few: trade and handyman (electricians, plumbers), lawn maintenance, landscape services, childcare, tutoring, education, business coaches accounting, bookkeeping real estate agents, travel agents, commercial, domestic cleaning, automotive-related services, computer-related services, and interior design/decorating.
With this is mind, consider that service franchises generally can offer more economical start up and operating costs and often require much less personnel for daily operation. A service franchise is frequently home-based and allows for - and often requires - a lot of mobility. Of course, there are pros and cons to this business model.
Service franchise advantages
Service franchises typically allow you entry at a fraction of the cost of a retail franchise - often just a few thousand dollars of investment compared to six figures for many retail opportunities. Yet, the income potential is still attractive and can be considerable. So there's the affordability factor and a lower upfront risk from day one.
There's also a wide selection of opportunities and niches in the service franchise sector. And many of these businesses have a healthy and constant demand (plumbing will always need to be repaired, for example).
Service franchises are typically "skills based" and offer those with the ability, interest, and dedication to be active and "work with their hands" as they build their business.
Because many service franchises do not require a brick and mortar location for franchisee operations, overhead is typically much lower. It's very easy to turn a quick and healthy cash flow when you work from a home-based office. And with very few employees, your staffing headaches can be minimal. And later on, the lack of a physical location makes it easier to take on additional territories at a minimal cost.
Additionally, working hours can be flexible - often by appointment only - so you're not restricted by long retail hours. This can be a big plus for some lifestyles. But keep in mind, like most businesses, the more you work the more you earn.
Service franchise disadvantages
Because of the nature of the beast, service-oriented franchises may not offer the kind of customer and transaction volume you'd find at a retail franchise. That fact alone can limit your degree of profitability. Especially, if you are a one man operation, there are only so many appointments you can make in a day. And small operations can become seriously derailed in the case of personal illness or any major sickness.
Also, some service franchisees can limit the number of employees you have and can also restrict your territory. You'll want to ask about this right off the bat. And, it's not uncommon to have to function as the owner/operator as well as the employee (you wear all the hats). You may be providing electrical repairs for your customer by day while marketing your business and handling paperwork by night.
And some trades, such as plumbers and electricians, require technical knowledge, certification, and continuing education. That could occupy time that would otherwise be spent making customer calls.
You'll certainly want to evaluate how these pros and cons measure up for you. For many who are active and like to be right in the middle of the action, a service franchise may be just right choice.
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