July 5, 2025 • 10 mins
Understanding these models is critical to aligning a franchise with your lifestyle and financial goals. Let’s figure out which type fits you best—book a call now!
DISCLAIMER: The information on this podcast is for general information purposes only. Franchising involves risk and careful consideration should be given before making any decisions.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
giuseppe_1_06-04-2025_15033 (00:00):
Now with the owner operator model,
(00:02):
you are running this businessfull time.
So essentially you don't have ajob.
Some franchise orders willrequire you for the first six to
12 months to be an owneroperator.
So what you're really investingis not just financially, but
it's sweat equity, right?
It's your time, it's yourcommitment to the business.
So what good is growth if you'renot gonna be profiting from it?
(00:24):
Welcome to the Franchise FreedomPodcast, where you can escape
the corporate trap throughfranchise ownership.
Here's your host, Giuseppe gr,the franchise guide.
giuseppe_1_06-04-2025_1 (00:38):
Welcome to the Franchise Freedom
Podcast.
I'm your host, GiuseppeGrammatico, your franchise
guide, the show where we helpcorporate executives experience
time and financial freedom viafranchising.
Thanks for joining us today.
We're gonna continue with theseries.
This is four or five.
We're gonna talk about threeownership models.
And I've talked about thisbefore, but I've tweaked it.
I've been talking some peoplekind of, what I'm hearing from
(01:02):
franchisees, from franchisors,and just from people in the
business.
I wanted to talk about itbecause this is also a little
bit of a.
A mindset shift here.
But yeah, I this is somethingthat comes up all the time and
there's a lot of different termsand some of them mean the same
thing, but wanted to provideclarity to anyone listening in
today.
So today it's really the threemodels a franchise ownership.
(01:24):
So let's start with thetraditional model.
I call this the owner operatormodel.
Now with the owner operatormodel, you are running this
business full time.
So essentially you don't have ajob.
Some franchise orders willrequire you for the first six to
12 months to be an owneroperator.
So that's something you wannafigure out in the very
beginning.
(01:44):
Do you offer semi-absentee orpart-time ownership or not?
That's something we would workon together for anyone in the
families that I work with.
And that owner operator model, Ialways say is your full-time in
the business.
This is how I ran my firstbusiness.
And I learned everything aboutthe business.
I was a sales marketingbookkeeping and a technician did
(02:07):
the actual work myself.
From anything that needed to getdone to dealing with customers,
cancellation, bookkeeping, allthat kind of stuff.
And, the way I look at own theowner operator is that you get a
better, you're running it fulltime, but you're getting a
better appreciation of thebusiness because you're wearing
all the hats.
So that is number one.
(02:27):
You really get that, that addedbenefit of learning the
business, wearing all the hats,understanding everyone's roles,
not just learning it fromlearning it from a from the the
manual that you're given orthrough some videos, but
actually performing all thefunctions in the business.
I tend to see owner operatorsscale relatively quickly because
this is all they're doing.
There's no distraction from ajob boss calling you conference
(02:50):
call.
Last minute training or eventyou have to attend, you're able
to dedicate a hundred percent ofyour time.
You are o obviously wanna growthis thing as fast as possible
because you don't have any otherincome coming in as you did from
the job.
So you're trying to get thisscaled up.
So what you're really investingis not just financially, but
(03:10):
it's sweat equity, right?
It's your time, it's yourcommitment to the business.
You get to decide what role youwanna place.
You may love sales.
And after running the business,the first six months, you may
say I love sales, but I'm gonnahire a full-time sales person.
And given the time involved formaybe the meetings and the
travel I'm gonna stick tonetworking at the local chamber
of event.
And that's the beauty of abusiness.
(03:31):
You pick and decide what rolesyou wanna play in that business.
So you're paying with sweatequity.
And another advantage that Inoticed too is, you're keeping
the expense and the investmentlower because you don't have
the.
General manager salary.
It could be 50, 70 500,000salary, whatever you're paying
that person.
And these are all numbers,right?
You have, if there's benefits,payroll, taxes all that stuff
(03:53):
that to be factored in.
So you're keeping the investmentlower.
The item seven, as we talkedabout on the previous episode
your pro forma is gonna be less.
Some models don't need any otherstaff.
There are, single employeemodels that you can run on your
own where your technicians are10 99.
So you're really keeping theexpense to the minimum, maybe
working from home and justhaving a asension of marketing
(04:15):
expense since subcontractors arepaid after the job is completed
and paid for.
That's something to look at.
It's not for everyone.
Some people do not have theability to leave their jobs.
And that's okay.
It is a requirement for somebrands, and that's something you
wanna figure out in a quick way.
When people say how do I knowit's a good fit?
It's not a good fit if it's, ifit require, if the brand
requires you to be full-time andyou can't be full-time on a rare
(04:38):
occasion, I just throw this inthere, there are brands that
will allow you to bring on thatmanager.
But they will be, an equityowner, 25, 50% owner in the
business.
Sometimes that is allowed veryrare, but you know, it's it's
come up before.
But that is that is an owneroperator.
So if you have the ability, thisis actually my recommendation
(05:00):
for those that wanna scalequicker.
Again, it doesn't have to be thecase.
Not all the brands allow it, butit definitely gives you the
better appreciation of learningthe business especially if it's
an industry you've never beeninvolved in.
'cause hey, you don't needexperience.
You do need the skillset set.
The franchisor will take care ofyou.
Then you have, semi-absenteewith a, what they call real gm
(05:23):
I'm sorry, real operator or a GMin place.
Now, this is something where,you are hiring a, you're gonna
be paying a lot of money forthis person, but someone that
has really demonstrated workingmaybe for other brands or was a
manager for multiple departmentsthat was able to scale, cut back
expense grow the business.
(05:44):
So this is gonna be where, semiyou're not involved full-time in
the business.
Maybe you're keeping the job ormaybe you're just involved
part-time, but this operatorreally is gonna be involved in
the business.
You're gonna be paying them amuch higher salary.
They're gonna have a lengthyresume.
They've really had to kind of,proven to you that they can
actually do this.
(06:05):
They're essentially functioningas an owner.
They've had, they've kind ofbeen in your shoes.
They're getting involved inhiring and firing and things
like that.
That is that's one way you'restill gonna be involved at a
certain capacity.
But that person really isspearheading the the business,
running the day to day.
And they're getting compensatedvia higher salary.
But this is not a, this isdefinitely a higher, where,
(06:28):
you're getting a lot ofreferences and referrals and
they've have a lengthy trackrecord of doing this for other
businesses.
Throughout various industries.
My favorite model and this issomething that and there's d
different approaches that I ranit with, was kind of a, an
investor, I investor operator orhybrid model.
And I didn't start off with thismodel.
(06:49):
Initially.
I was an owner operator thatswitched to this after a couple
years.
These models are for people thatare in, essentially the owner's
involved as much as possible.
And they're putting a generalmanager in place that will, own
a percentage of the business.
I did phantom equity.
Phantom equity was a percentageof the profits you could do
percentage of the overallbusiness.
(07:10):
The difference is when you go tosell the business and they own
25%, they would get 25% of theproceeds.
So something to consider intowhat you're most comfortable
with.
But with this model, thedifference here is.
You're involved.
It could be part-time capacity,you're doing everything you can
to get them up and running.
And then really just kind offiguring out that my my camera
(07:33):
switch here.
Kind of figuring out, okay,they're gonna get a percentage
of the profits, so why is thatcrucial?
They're gonna do that.
Manager's gonna do whatever theycan to keep.
To grow the business and keepthe expenses less.
Now that they're getting apercentage, just say that's 25%
of every dollar in profitthey're gonna make those
decisions.
(07:53):
Do I really need to add tomarketing?
Do I really need this additionalemployee?
Is that something we canautomate with AI or via email or
is that a, can we divvy up thefunctions among the, amongst the
staff we have, I gotta grow thisand now I have the added
incentive.
So they're gonna do whatever ittakes to grow the business,
which growing a business is easyif you're not making money,
(08:13):
right?
So they want to grow thisbusiness and be profitable and
make the money.
They're gonna treat thisbusiness more like an owner.
And this is crucial because atthe end of the day I've we had I
was listening to an interviewwhere the gentleman had a
million dollar business and saidthey scaled from a million in
revenue to 5 million.
They said that they were makingin that process the same net
(08:34):
income on that one that 1million versus the 5 million.
So what good is growth if you'renot gonna be profiting from it?
And some of those difficultdecisions may be to cut the
client that is taking up 80% ofyour time and maybe some low
lower margin business.
Ways to automate things like ai.
I use AI in my business.
I don't charge for our services.
(08:55):
But on the flip side I wanna beable to get back to people right
away.
So if five people message me atthe same time, the ai can answer
basic questions, reschedulingand stuff like that.
Point, the, to the right podcastto take a look at.
So it doesn't take the place ofme, but it takes some of the
admin off of me cutting myexpense so we can continue to
(09:15):
run the podcast and offer theservice at no cost directly to
you.
So those are ways to takeadvantage.
So the three types of ownershipwe'll review'em again.
It's the owner operatorfull-time model, semi-absentee
with a real operator puttingthat person, high-end, elite
employee in place.
And then we have the investoroperator hybrid model.
Which is the model I shifted tolater on where you have that
(09:37):
that general manager that has askin in the game, whether it be
phantom equity or underlyingequity, running a day to day,
which I think maybe it's notinitially, but it's something
you transitioned to like I did.
I didn't know where the, whatthe future brought and how
quickly I wanted to scale and Ijust met the right person at the
right time.
And that person the mistake Imade was we did annual bonus,
(09:59):
which is a mistake on my end.
We switched it up to quarterlybecause that person didn't know
where we stood till the end ofthe year, and it's better
incentivize quarterly as we didthe reconciliations and things
like that updated the quarterlyp and ls as well as the monthly.
It's one mistake I made that Iencourage you not to make that
same mistake.
Thanks again for joining.
Would love to figure out whichtype best fits for bets fits
(10:20):
your situation.
We could book a call and figurethat out on our intro call on
that 20 minute call Gigi thefranchise guide.com.
Talk to you guys soon.
See ya.
Thanks for tuning in if you wantto learn how to make the
transition from corporate toowning your franchise.
Join Giuseppe on the nextepisode.
You can also follow on allsocial media platforms and
(10:42):
achieve financial and timefreedom today.
Now with the owner operator model,
(00:02):
you are running this businessfull time.
So essentially you don't have ajob.
Some franchise orders willrequire you for the first six to
12 months to be an owneroperator.
So what you're really investingis not just financially, but
it's sweat equity, right?
It's your time, it's yourcommitment to the business.
So what good is growth if you'renot gonna be profiting from it?
(00:24):
Welcome to the Franchise FreedomPodcast, where you can escape
the corporate trap throughfranchise ownership.
Here's your host, Giuseppe gr,the franchise guide.
giuseppe_1_06-04-2025_1 (00:38):
Welcome to the Franchise Freedom
Podcast.
I'm your host, GiuseppeGrammatico, your franchise
guide, the show where we helpcorporate executives experience
time and financial freedom viafranchising.
Thanks for joining us today.
We're gonna continue with theseries.
This is four or five.
We're gonna talk about threeownership models.
And I've talked about thisbefore, but I've tweaked it.
I've been talking some peoplekind of, what I'm hearing from
(01:02):
franchisees, from franchisors,and just from people in the
business.
I wanted to talk about itbecause this is also a little
bit of a.
A mindset shift here.
But yeah, I this is somethingthat comes up all the time and
there's a lot of different termsand some of them mean the same
thing, but wanted to provideclarity to anyone listening in
today.
So today it's really the threemodels a franchise ownership.
(01:24):
So let's start with thetraditional model.
I call this the owner operatormodel.
Now with the owner operatormodel, you are running this
business full time.
So essentially you don't have ajob.
Some franchise orders willrequire you for the first six to
12 months to be an owneroperator.
So that's something you wannafigure out in the very
beginning.
(01:44):
Do you offer semi-absentee orpart-time ownership or not?
That's something we would workon together for anyone in the
families that I work with.
And that owner operator model, Ialways say is your full-time in
the business.
This is how I ran my firstbusiness.
And I learned everything aboutthe business.
I was a sales marketingbookkeeping and a technician did
(02:07):
the actual work myself.
From anything that needed to getdone to dealing with customers,
cancellation, bookkeeping, allthat kind of stuff.
And, the way I look at own theowner operator is that you get a
better, you're running it fulltime, but you're getting a
better appreciation of thebusiness because you're wearing
all the hats.
So that is number one.
(02:27):
You really get that, that addedbenefit of learning the
business, wearing all the hats,understanding everyone's roles,
not just learning it fromlearning it from a from the the
manual that you're given orthrough some videos, but
actually performing all thefunctions in the business.
I tend to see owner operatorsscale relatively quickly because
this is all they're doing.
There's no distraction from ajob boss calling you conference
(02:50):
call.
Last minute training or eventyou have to attend, you're able
to dedicate a hundred percent ofyour time.
You are o obviously wanna growthis thing as fast as possible
because you don't have any otherincome coming in as you did from
the job.
So you're trying to get thisscaled up.
So what you're really investingis not just financially, but
(03:10):
it's sweat equity, right?
It's your time, it's yourcommitment to the business.
You get to decide what role youwanna place.
You may love sales.
And after running the business,the first six months, you may
say I love sales, but I'm gonnahire a full-time sales person.
And given the time involved formaybe the meetings and the
travel I'm gonna stick tonetworking at the local chamber
of event.
And that's the beauty of abusiness.
(03:31):
You pick and decide what rolesyou wanna play in that business.
So you're paying with sweatequity.
And another advantage that Inoticed too is, you're keeping
the expense and the investmentlower because you don't have
the.
General manager salary.
It could be 50, 70 500,000salary, whatever you're paying
that person.
And these are all numbers,right?
You have, if there's benefits,payroll, taxes all that stuff
(03:53):
that to be factored in.
So you're keeping the investmentlower.
The item seven, as we talkedabout on the previous episode
your pro forma is gonna be less.
Some models don't need any otherstaff.
There are, single employeemodels that you can run on your
own where your technicians are10 99.
So you're really keeping theexpense to the minimum, maybe
working from home and justhaving a asension of marketing
(04:15):
expense since subcontractors arepaid after the job is completed
and paid for.
That's something to look at.
It's not for everyone.
Some people do not have theability to leave their jobs.
And that's okay.
It is a requirement for somebrands, and that's something you
wanna figure out in a quick way.
When people say how do I knowit's a good fit?
It's not a good fit if it's, ifit require, if the brand
requires you to be full-time andyou can't be full-time on a rare
(04:38):
occasion, I just throw this inthere, there are brands that
will allow you to bring on thatmanager.
But they will be, an equityowner, 25, 50% owner in the
business.
Sometimes that is allowed veryrare, but you know, it's it's
come up before.
But that is that is an owneroperator.
So if you have the ability, thisis actually my recommendation
(05:00):
for those that wanna scalequicker.
Again, it doesn't have to be thecase.
Not all the brands allow it, butit definitely gives you the
better appreciation of learningthe business especially if it's
an industry you've never beeninvolved in.
'cause hey, you don't needexperience.
You do need the skillset set.
The franchisor will take care ofyou.
Then you have, semi-absenteewith a, what they call real gm
(05:23):
I'm sorry, real operator or a GMin place.
Now, this is something where,you are hiring a, you're gonna
be paying a lot of money forthis person, but someone that
has really demonstrated workingmaybe for other brands or was a
manager for multiple departmentsthat was able to scale, cut back
expense grow the business.
(05:44):
So this is gonna be where, semiyou're not involved full-time in
the business.
Maybe you're keeping the job ormaybe you're just involved
part-time, but this operatorreally is gonna be involved in
the business.
You're gonna be paying them amuch higher salary.
They're gonna have a lengthyresume.
They've really had to kind of,proven to you that they can
actually do this.
(06:05):
They're essentially functioningas an owner.
They've had, they've kind ofbeen in your shoes.
They're getting involved inhiring and firing and things
like that.
That is that's one way you'restill gonna be involved at a
certain capacity.
But that person really isspearheading the the business,
running the day to day.
And they're getting compensatedvia higher salary.
But this is not a, this isdefinitely a higher, where,
(06:28):
you're getting a lot ofreferences and referrals and
they've have a lengthy trackrecord of doing this for other
businesses.
Throughout various industries.
My favorite model and this issomething that and there's d
different approaches that I ranit with, was kind of a, an
investor, I investor operator orhybrid model.
And I didn't start off with thismodel.
(06:49):
Initially.
I was an owner operator thatswitched to this after a couple
years.
These models are for people thatare in, essentially the owner's
involved as much as possible.
And they're putting a generalmanager in place that will, own
a percentage of the business.
I did phantom equity.
Phantom equity was a percentageof the profits you could do
percentage of the overallbusiness.
(07:10):
The difference is when you go tosell the business and they own
25%, they would get 25% of theproceeds.
So something to consider intowhat you're most comfortable
with.
But with this model, thedifference here is.
You're involved.
It could be part-time capacity,you're doing everything you can
to get them up and running.
And then really just kind offiguring out that my my camera
(07:33):
switch here.
Kind of figuring out, okay,they're gonna get a percentage
of the profits, so why is thatcrucial?
They're gonna do that.
Manager's gonna do whatever theycan to keep.
To grow the business and keepthe expenses less.
Now that they're getting apercentage, just say that's 25%
of every dollar in profitthey're gonna make those
decisions.
(07:53):
Do I really need to add tomarketing?
Do I really need this additionalemployee?
Is that something we canautomate with AI or via email or
is that a, can we divvy up thefunctions among the, amongst the
staff we have, I gotta grow thisand now I have the added
incentive.
So they're gonna do whatever ittakes to grow the business,
which growing a business is easyif you're not making money,
(08:13):
right?
So they want to grow thisbusiness and be profitable and
make the money.
They're gonna treat thisbusiness more like an owner.
And this is crucial because atthe end of the day I've we had I
was listening to an interviewwhere the gentleman had a
million dollar business and saidthey scaled from a million in
revenue to 5 million.
They said that they were makingin that process the same net
(08:34):
income on that one that 1million versus the 5 million.
So what good is growth if you'renot gonna be profiting from it?
And some of those difficultdecisions may be to cut the
client that is taking up 80% ofyour time and maybe some low
lower margin business.
Ways to automate things like ai.
I use AI in my business.
I don't charge for our services.
(08:55):
But on the flip side I wanna beable to get back to people right
away.
So if five people message me atthe same time, the ai can answer
basic questions, reschedulingand stuff like that.
Point, the, to the right podcastto take a look at.
So it doesn't take the place ofme, but it takes some of the
admin off of me cutting myexpense so we can continue to
(09:15):
run the podcast and offer theservice at no cost directly to
you.
So those are ways to takeadvantage.
So the three types of ownershipwe'll review'em again.
It's the owner operatorfull-time model, semi-absentee
with a real operator puttingthat person, high-end, elite
employee in place.
And then we have the investoroperator hybrid model.
Which is the model I shifted tolater on where you have that
(09:37):
that general manager that has askin in the game, whether it be
phantom equity or underlyingequity, running a day to day,
which I think maybe it's notinitially, but it's something
you transitioned to like I did.
I didn't know where the, whatthe future brought and how
quickly I wanted to scale and Ijust met the right person at the
right time.
And that person the mistake Imade was we did annual bonus,
(09:59):
which is a mistake on my end.
We switched it up to quarterlybecause that person didn't know
where we stood till the end ofthe year, and it's better
incentivize quarterly as we didthe reconciliations and things
like that updated the quarterlyp and ls as well as the monthly.
It's one mistake I made that Iencourage you not to make that
same mistake.
Thanks again for joining.
Would love to figure out whichtype best fits for bets fits
(10:20):
your situation.
We could book a call and figurethat out on our intro call on
that 20 minute call Gigi thefranchise guide.com.
Talk to you guys soon.
See ya.
Thanks for tuning in if you wantto learn how to make the
transition from corporate toowning your franchise.
Join Giuseppe on the nextepisode.
You can also follow on allsocial media platforms and
(10:42):
achieve financial and timefreedom today.
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