A Hands-Off Approach can Hurt Customers, Employees and Long-Term Performance
A common discussion prospective candidates ask me is about passive franchise ownership. The idea of passive ownership became popular a few years ago, thanks to TikTok influencers claiming that you can make lots of money owning businesses without ever having to work in them. I felt compelled to write about this subject due to experiences I have had lately at local establishments that are run passively.
Over the summer, my family and I visited several franchises while traveling. The first thing that hit me was how cold and sterile many now feel. You are greeted by a large wall of computer screens where the customer is expected to place their own order. I found myself helping other customers navigate them — and once, someone had to help me. Staff were clearly overworked and did not appear happy. In one business, the garbage was overflowing inside the property. We left.
A few years ago, I went on a quest to find the owners of my local gym. There were issues with the equipment. Garbage was not being picked up and was strewn outside the facility and into the parking lot. It turns out this location is owned by a holding company that does not want to be found. When I contacted the corporate office via email, I received an auto-response and no follow-up. Same when I reached out via social media — a bot response and nothing more.
Eventually the equipment was upgraded. After contacting the property management company myself, the garbage was picked up regularly. Why did I take this upon myself? This business is in my backyard and it reflects my community.
Fast forward, and more issues have crept up.
An employee regularly stationed at the front desk sits with their head down, looking at their phone and does not greet anyone who comes in to scan their app. In all of my time there, I have never seen this person do anything beyond standing at the front desk. Other employees clean. This one does not. The flooring is coming up in sections, creating a rippling, bumpy effect that is a hazard for anyone. Particularly those more prone to falling. Out front, a section of the curb is literally crumbling. A potential lawsuit waiting to happen.
Why would business owners allow these problems to fester? Passive franchise ownership. I would be willing to bet that not one of the owners of that holding company has ever stepped foot in that facility — or any of the others they own. My guess is they meet monthly to review KPIs and quarterly to discuss investment strategies. Meanwhile, a few simple corrections would go a long way toward running a better business.
Perhaps I am the only one bothered by all of this — but I highly doubt it. Customer satisfaction is faltering across the board. According to the American Customer Satisfaction Index (ACSI), alarm bells are ringing. Customer complaints are at record levels. The question is whether anyone is listening.
Learning Your Business Model
If you are exploring franchise ownership, your goal should be to learn that business model from A to Z. Work in it long enough to understand the nuances, the complexities, and the everyday frustrations. Labor continues to be one of the biggest challenges across all industry sectors. You will make hiring mistakes — everyone does — but you will want to learn from them. Those lessons shape the culture of your business. Your team will respect that you have a strong command of what is happening, even when you are no longer there every day.
Franchises typically offer three models of ownership:
1. Owner/Operator
You are working in the business day in and day out. You have been trained to perform whatever services are expected and you are wearing many hats.
2. Executive Model
You are leading the team while putting in full-time hours each week, filling a role that is necessary to keep the business running. You are not performing the actual service, except in a pinch, but you have the capability to do so. It is the exception, not the rule.
3 .Semi-Passive
All positions are filled and you are working on the business roughly 20 hours per week. Some concepts allow this from the start, but proceed carefully. You still need to be plugged in, especially in the early stages. Others move to this model one to two years in, once the business is well established.
If your goal is to eventually remove yourself from the day-to-day, that is a completely legitimate path but earn it. You may not know every employee’s name the way you once did, but you should still have a strong command of what is happening on the ground. That awareness, even from a distance, is what creates a cohesive culture. One where your customers and staff alike will be happy.
“Climbing mountains may seem easy, but it takes thousands of foothills and perseverance to reach the highest peak.” — Bhawna Dehariya
