Semi-Passive Ownership & The Path to Franchise Freedom

Escape the corporate rat race with this deep dive into franchise ownership models. 

Giuseppe Grammatico, The Franchise Guide, explains how to transition from employee to owner without losing your mind—or your salary. We cover the difference between owner-operators and semi-passive investors, how to run your financials, and how to find the perfect brand match. 

Choose the right path at https://ggthefranchiseguide.com. 

DISCLAIMER: The information on this site is for general information purposes only. Franchising involves risk and careful consideration should be given before making any decisions. No time or money guarantees are provided.


00:00 Introduction to Franchise Freedom
01:03 Understanding Semi-Passive Ownership
01:03 The Two Paths to Ownership
01:18 Full-Time vs. Semi-Passive Ownership
02:39 Key Considerations for Semi-Passive Ownership
02:39 The Myth of Truly Passive Income
04:53 The Pro Forma Reality Check
05:20 Financial Planning and Proformas
06:42 Managing the Manager Without Losing Your Mind
06:56 Tips for Managing Semi-Passive Ownership
09:53 Recap and Final Thoughts
09:53 The Alignment Checklist
12:31 Listener Engagement and Resources
14:22 Closing Remarks

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The Franchise Freedom: Discover Your New Path to Freedom Through Franchise Ownership, Book by Giuseppe Grammatico https://ggthefranchiseguide.com/book  or purchase directly on ...

Transcript

Giuseppe Grammatico 0:00

The owner operator is for someone that is looking to really dive in a hundred percent. That is the route I took in my journey two decades ago and really was able to scale that business relatively quickly simply because I was distraction free. Keep in mind the word semi-passive, not passive. Passive is something where, you know, you're investing in the stock market. There's really not much to do. Sometimes, they want a full-time owner and then eventually they put together a program and support systems to allow for semi-passive ownership. That's business, right? Things evolve, new systems are put into place.

0:35

Welcome to the Franchise Freedom Podcast, where you can escape the corporate trap through franchise ownership. Here's your host, Giuseppe gr, the franchise guide.

Giuseppe Grammatico 0:48

Hey guys, welcome to the Franchise Freedom Podcast. I'm your host, Giueseppe Grammatico, your franchise guide, the show where we help corporate executives experience time and financial freedom. Thanks for joining us today. Been getting a lot of similar questions and, wanted to kind of review that today. So the topic for today is gonna be what is semi passive investing or semi-passive ownership in the franchise industry? Common theme, common question. I figured I'd tackle that today. So what is semi-passive ownership now? Taking a step back, there's really two types of ownership when it comes to franchising. We call it full-time or the owner operator, where you are gonna be dedicating a hundred percent of your time towards this business. This is maybe someone that is leaving their job, maybe they were recently laid off, and they're gonna be giving a hundred percent of their attention to the business. Some of the benefits of running a business full-time as an owner operator is that you're gonna keep your costs low. You're not gonna need that general manager necessarily in place. You're gonna get to scale that business faster since it's you, the franchise owner that's running the day to day, versus hiring a general manager or key employee. The owner operator is for someone that is looking to really dive in a hundred percent. That is the route I took in my journey two decades ago and really was able to scale that business relatively quickly simply because I was distraction free. Didn't have to go to a job or only work, so many hours a day, just say around lunchtime or after hours. I was able to dedicate the entire week, the entire day, towards that business. And while we're on that topic, there are franchise companies that you know, due to their research and reviewing how their franchises have done, have stated. You know, we only accept individuals in this franchise so in order to get approved, you need to be full-time in the business in order for this to work, in order to get approved for that specific franchise. Now then there's the idea of semi passive ownership. Sometimes you hear semi absentee, you hear it as executive type of ownership. There's so many different terms for it, and all it really means is that you are part-time in the business. So maybe it's keeping a job and running the business with a general manager in place. You know, you have that general manager running the day to day. Checking in with them throughout the day, once a week or nights and weekends, so that's what we call semi-passive. Keep in mind the word semi-passive, not passive. Passive is something where, you know, you're investing in the stock market. There's really not much to do. You could do your research as you see fit whenever you have time. But the business, you know, the investments kind of run on their own. That is not what franchise ownership is. We've seen some models where there was a kind of a middle layer where there was a management team kind of taking in place. You see that in the hotel space, but not so much in the home services space or boutique, fitness and a lot of the other brands that we work with. So we're not gonna spend a lot of time there. Going back to semi-passive, in order for this to work. I always say there's a couple things to really consider and keep in mind. Number one is, does the franchisor allow for semi-passive ownership? Now, semi-passive ownership could mean that you're able to put in so many hours a day while keeping a job and, or it's splitting the time up with your spouse your partners, because everyone's tackling different roles. But there's really that key employee in place. It could be a general manager, an operations manager. There are some brands out there that you're really just empowering one employee. Maybe not paying them a manager's salary but, having someone as kind of the go-to, for anything that needs to get done or follow up and things like that. This is what we call semi-passive but equally as important, the franchisor has to support it. Also, find out what they're doing. What are the service offering that the franchisor has in place? So it could be a manage the manager, train the trainer program. It could be turnkey marketing. Where the leads are being, funneled over to a call center. Maybe they offer bookkeeping service. So they're offering these additional services in order for you to be able to be as hands-off as possible. When doing your due diligence, you wanna definitely find out the offerings, what the franchisor has in place in order to support their franchisees. When doing this type of research, you also want to talk to semi-passive owners. You wanna talk to full-time owners, just to compare notes. In a semi-passive style business, obviously you're gonna have more costs because if there is that general manager in place, there may be an additional salary, additional payroll that you have to factor into your item seven, which is gonna be your first 90 days of operation. So what is that salary? You know, with payroll expenses and taxes and everything else that gets added to the mix. And I encourage everyone, regardless of what they're leaning towards, look at both options as far as a pro forma. Putting together the numbers, number one on the investment, and that's again, the item seven in the franchise disclosure document. But that proforma is essentially estimating sales and then your costs on a monthly basis so you know exactly what your break even is. If it's 10,000 a month, you need to exceed 10,000 to make any profit. Covering your costs, your marketing, if there's a rent. All your expenses when it comes to payroll, staff and things like that. I encourage you to run a side by side, instead of paying that general manager, operations manager, we'll call it a$75,000 salary. You could pay yourself that salary being able to leave your employer and run the business full-time. Things to think about: always encourage you to spend the extra time and always create a full-time and part-time pro forma to see which works out and you kind of have different scenarios. You'll need those scenarios as well should you decide to leave your job at a later point in time to kind of figure out. Is that gonna be six months? Is it gonna be 12? Again, these are just proforma that you're creating. Things could change. The business could scale faster than expected or the opposite, so keep that in mind. But at least you have some numbers. You may just have a revenue goal of 25,000 a month averaging 20%, and you know that you need to hit that number in order to leave your job and so be it. That's the goal you add to the wall and, proceed. But going back to the semi-passive ownership, one is not better than the other, versus full-time. It's really what you're most comfortable with. If you're the sole provider in the family and you're relying on those benefits and you can't afford it, you wanna again, run the analysis on the two proformas. Also another thing to consider is if you are hiring a general manager or an operations person, make sure to go to training together with that individual so that everyone's on the same page, but also have a clear understanding of the roles. Hey guys. Thanks for listening. I hope you're enjoying the show. As a thank you for being a valued listener, wanted to offer you a free copy of my book, franchise Freedom. This book was written back in 2020, and it's my exact blueprint in helping you find that perfect franchise. I wrote it based off my experiences and wanted to pass that along to you. Wanna chat today? You could book a call directly on our website. Top right. Side of that screen and you can schedule a 20 minute call. We'll dive into if a franchise is a good fit. I help you get qualified and figure out what that perfect franchise match may be. So I hope you take me up on my offer. Once again, franchise Freedom. Download the book today for free or book a call with me directly, and we'll help you bypass all that information you find online. Most importantly, figuring out. If a franchise is the right fit, and then figuring out what that perfect franchise looks like. So thanks again for listening to the show and back to the show. This is an area I think that will increase your odds of making this all work significantly, because you wanna be on the same page as that manager so that you know exactly what their responsibilities are. They know what their responsibilities are when you are available. So if you have a job and you are only available 12 to one Eastern for lunch every day, that is the only time they can call you. They should know that. What decisions can they make if it's giving a offering a customer credit, allowing a customer to cancel, whatever the case may be, they need a clear understanding. I recommend something as simple as a Google document or a Google Sheet. That way it's live, it could be shared. It tracks all the changes, and it's something that you can edit on a daily or weekly basis. So maybe it's a responsibility or task you didn't think of initially, you can add that to the list or maybe it's something that you wanna take off the plate of the manager. For example accounting review once a week; that's something you wanna handle. It's a good kind of exercise to write all the tasks and then, you know, kind of slide'em left for the manager, right for the owner, or if you have other individuals. That way everyone knows exactly what their roles are and responsibilities. But I think that that's gonna be key because if you're hiring a manager and they expect to be talking to you every hour and you have a full-time job that is gonna be an issue. So they need to understand the role, their responsibility, what they can and what they cannot do. Hiring, firing, credits, you name it, so that they're very clear, and that's something you wanna be meeting with that individual if you can at least daily initially. Maybe that's in the evenings or at lunch. And then maybe you change that up to in person once a week. Especially if you have a job that you could work from home or at least one Zoom meeting a week and just kind of figuring out, engaging where the support is needed. Do they need additional training? Are there questions on responsibilities or tasks and getting very clear. To recap, two main types of ownership in the franchise space, and that's owner operator full-time and then there's semi passive ownership. You know, some people call it a side hustle. It's really a business on the side, so you can use any phrase you want. But essentially it's, figuring out what availability you have throughout the day and, how much time you could dedicate towards this business. Then you have passive ownership, which really doesn't exist not much in the franchise space. So I would focus on the first two. With semi passive ownership as well, considering, when you are available. If you have flexibility during the day, great. But if that availability is only nights, weekends, and holidays, we need to plan accordingly and find a brand that that would work with. It's gonna be a combination of the right franchise company as well as the general manager running the day to day. It's really setting the expectation that when you're looking at brands one of the most important things we talk about is knowing the role in the business what exactly you'll be doing in the business, average day in a life. Also it comes down to availability, cause we wanna make sure that that franchisor will support that decision to run the business, semi-passive. We need to create a pro forma accordingly. A task responsibility list for the entire team and make sure that's something you're comfortable with while simultaneously creating that pro forma for a full-time owner. So that you can get a clear understanding of the break even and expenses that come along with a full-time owner as well as a semi-passive owner that has that general manager in place. So, I hope this was helpful. There's a lot buzz terms and you know, words and, and phrases and things like that. But ultimately, you know, at the end of the day, the franchise companies have that franchise avatar who they're looking for as their ideal franchisee, based off the feedback, based off the performance of the franchisees in the system. Sometimes, they want a full-time owner and then eventually they put together a program and support systems to allow for semi-passive ownership. That's business, right? Things evolve, new systems are put into place. One final note on a owner operator. If that's someone that's full-time, that can in a sense, be run part-time. If it's a husband and wife team where maybe you're both putting in part-time efforts equaling a full-time owner. So these are things to ask the franchise or whoever you're speaking with in the very beginning of the process to see if it works, because it's gonna save you a lot of time and a lot of headaches and exploring brands, if they don't allow that type of ownership. If they just want the one person full-time, whatever the case may be, you wanna make sure you're aligned with that franchisor and this is addressed in the very beginning. We're talking first, second call, so they have a real good understanding. If this is gonna be a good fit and if it's not, part ways. Look for other companies that perfectly align with your skill sets, how you wanna run the business and obviously have availability in your market. I hope this was helpful. We hammered the two types of ownership, but just wanted to make it clear because there's a lot of misconceptions, a lot of questions around this. I encourage everyone to really explore your job. You know, if you have a job, what is your flexibility? If you work from home, can you maybe answer more? Phone calls and emails. Maybe there's another position in the organization that can give you some more flexibility to run the business. These are the questions you should be asking your employer. Taking a job could be for a pay cut closer home, but it allows you the flexibility to work from home, or only commute into the office a few days a week. Maybe taking a pay cut, but having the ability to launch the business and you know what? If your goal is to eventually transition full-time into the business, so be it. Maybe it's that first year of taking a little bit less of a salary, but getting a salary in order to get that business up and running and eventually leave the job anyway. Some things to consider if there's any question or any topic or anything, I can dive in a little bit deeper, let me know. These are questions that I get. I just promised the last few individuals, they'll get a kick outta this because we discussed this and I said I was gonna record a show and I obviously keep everyone's name and information confidential. Hopefully you found this helpful. Let me know if you wanna do a deeper dive or if you wanna know how this would work for your specific situation. Just go to the brand new website. We just updated ggthefranchiseguide.com. You could book a call top right hand side of the screen. We'll talk to your situation, see if it works. Let us know, but we'll walk through, some different scenarios. Maybe it's something that you have to talk, go back to your employer to see if you could work from home or have a little bit more flexibility. But, love to talk, through the process. Answer any questions. Maybe we'll create another episode. But I appreciate all your support. Let us know in the comments, thoughts. Was this helpful? Was it not? Can I help in any other way? go to the website. We have a ton of previous episodes. We're gonna be revisiting a few, kind of with some updates and if there are any changes and, looking forward to your feedback. Thanks again for your support, everyone, and we will talk to you guys soon. See you.

14:27

Thanks for tuning in if you want to learn how to make the transition from corporate to owning your franchise. Join Giuseppe on the next episode. You can also follow on all social media platforms and achieve financial and time freedom today.