I've watched franchising evolve for over thirty years, and one thing has become crystal clear: we've been thinking about it all wrong.
Most people view franchising as an industry. It's not. It's a business model that can be applied across virtually any sector.
This fundamental misunderstanding creates artificial barriers that prevent talented entrepreneurs from exploring franchise opportunities that could transform their lives.
Through ActionCOACH, I've built a franchise that operates in 84 countries with more than a thousand franchise partners. What I've learned might surprise you.
The Model vs. Industry Distinction
"Thirty years ago, I said that franchising may not be able to go into all sectors, but today, it most definitely does."
When we at ActionCOACH started, there were very few white-collar franchises. The landscape was dominated by food and cleaning businesses.
Today? Franchising spans everything from car dealerships to hotel organizations to business coaching and training.
The model forms a partnership. I want people to think of our business in particular as a partnership, and the way we do partnership is through the franchise model.
This distinction matters because it opens up possibilities. There are more than 3,000 different franchise brands available across numerous sectors, demonstrating the versatility of the franchise model. The real estate, healthcare, residential, business services, automotive, and retail sectors comprise more than half of the franchise opportunities available today.
When you stop thinking about franchising as an industry and start seeing it as a business model, you suddenly have access to countless sectors.
The Passive Income Possibility
One of the most persistent myths about franchising is that it's immediately a passive investment.
It's generally not.
"In the beginning, the franchise owner should really think about how they can be a part of the day-to-day operations. Too many people try and be passive too fast."
Can a franchise eventually become a passive investment? Yes, but like any business, it takes significant effort to get it off the ground.
I mean, if you want to employ more capital, you can easily hire senior people to run your franchise businesses. But I love to see the owner's entrepreneurial spirit.
One of the great things about franchising is that it partners a system with someone who has entrepreneurial drive. Someone who wants to build their own future and their own freedom. This partnership gets great results in most cases.
Franchising comes with an established business model, but franchisees do much more than just put their name on the business license. Effective franchise leaders ensure the execution of the franchise model while motivating employees, fostering career growth, and cultivating a positive workplace culture.
Breaking Down The Million-Dollar Myth
The belief that franchising requires at least a million in startup capital has become a false benchmark that keeps many talented entrepreneurs from ever exploring this path.
"One of the great things about the evolution of the franchise business model is that it's moved on from businesses where you need a million in capital to open a store, to more service-based businesses where you may need just a van, or you may be able to work from home."
This evolution of franchising into service-based businesses has changed the economics dramatically. Service businesses often have higher profit margins. And if that business operates on a retainer, subscription, or membership model, the ROI becomes even stronger.
Many brick-and-mortar franchise opportunities have initial investments starting at several hundred thousand and heading north of $1 million, which presents a formidable entry barrier for first-time investors. However, low-cost alternatives offer an easier entry into franchising, and they're an excellent way to get started.
The reality? There are some great $100,000 and below franchises that can provide a very high return on your investment in the long run.
Some of the greatest opportunities are in franchises most people have never heard of before.
The Skill Transfer Advantage
"I think industry experience is quite overrated."
I've been involved in cleaning franchises, business coaching franchises, and many different businesses that use the franchise model. The people who succeed aren't necessarily industry experts.
They're people with great business acumen, leadership strength, team-building skills, and sales and marketing abilities.
These are the people who thrive because the franchise organization is basically a plug-and-play system. It allows the franchise partner to get to market much faster. It caps their spending. They don't have to keep innovating because the organization does that for them.
What they get to do is step in and start making sales on day one.
Leadership is crucial in franchising. Sales and marketing skills are important too. But the focus should be on being a great builder of companies, a true business owner.
That's one thing we find many franchisees learn: how to be a business owner rather than just a business operator who runs the business.
Industry experience is valuable, no question. But for many business leaders, it always ranks second after a broader set of transferable functional competencies, interpersonal skills, and emotional intelligence. Candidates with strong transferable skills in these areas can acquire industry knowledge over time.
Real-World Success Patterns
The success rate for new franchises after one year is 6.3% higher than that of independent companies. This shows the value of the franchise business model regardless of industry.
Even more impressive: 92% of franchises are still in business after two years, and 85% after five years.
Why such high success rates? The answer lies in the comprehensive support systems, proven business models, and brand recognition that franchises offer.
When a strong brand knows itself and knows its customers, there is consistent execution from the people to the product, and there is great value. This success model works across sectors.
The Entrepreneurial Mindset Shift
"When you're looking at going into business for yourself, one of the great things is the franchise model allows you to be in business for yourself, but not by yourself."
It allows you to have partners who contribute to your success. And I don't just mean the franchise company, but the other franchise partners in the organization who become a great part of your success network.
This mindset shift is crucial. Instead of asking "Which industry should I enter?" first ask "Which business model suits my strengths?"
If you use the franchise model as your path to success, then you can look at whether you want to be in retail or service or another sector. You can pick the sector after you've chosen the business model.
There are so many benefits to being in a franchise that allow you to get going much faster for much less cost, and with much less work building the organization.
The systems, technology, marketing, and training you get when you join a franchise – it's astounding how quickly they can help you succeed.
A growing number of people are turning to franchising to gain financial freedom and more control over their lives. The franchise model has proven its resilience, presenting an inherently less risky way to go into business, complete with training and support from a franchisor.
Future Franchise Outlook: Democratizing Entrepreneurship
"The desire for people to be their own boss today is stronger than ever. There are so many more people who want to own their own business."
Franchising is stepping in as a gateway to entrepreneurship. It's a stepping stone that takes great executives and people with dreams of business ownership and practically holds their hand as they enter entrepreneurship with far less risk.
When you join an organization where their success depends on your success, you know you're making a great decision.
I love franchising. I love how it helps young people and first-time business owners get into great businesses and build their own success.
"The future of franchising is that we're expanding into more and more professions and industries. It will allow more people to become entrepreneurs and make business ownership easier and more accessible."
This democratization of entrepreneurship through franchising is already happening. The total output of franchised businesses is projected to increase by 4.1% to $893.9 billion in 2024, up from $858.5 billion in 2023.
Franchising is about to experience a significant growth spurt over the next decade. It could be a great way for many people to supplement their retirement, especially with some excellent, low-cost opportunities that provide income, flexibility, and long-term equity.
Rethinking The Model
The franchise-franchisee relationship depends on mutual success. When everyone works together, everyone wins.
But franchisors must keep up with the changing world and provide franchise owners with the right tools and resources. And franchisees must be willing to adapt.
When all these elements align, a kind of magic happens.
So I challenge you to rethink franchising. It's not an industry. It's not just for the wealthy. It doesn't require specific industry experience.
It's a versatile business model that can be applied across countless sectors, accessible to entrepreneurs with various backgrounds and capital levels.
The question isn't whether franchising is right for your industry. The question is whether the franchise model is right for your entrepreneurial journey.
Be in business for yourself, not by yourself. See if the ActionCOACH model fits your strengths and market by booking a free discovery call today.