OWNING ONE: THE PROS & CONS OF BEING A SINGLE UNIT OWNER OPERATOR

Photo by Ivan Samkov

From managing the register to setting staff schedules, every day you carry the entire franchise on your shoulders. Owning a single-unit franchise means you control the experience on the ground and reap the benefits when things go well. But all the risk and responsibility rest on your shoulders.

OWNING ONE: THE PROS & CONS OF BEING A SINGLE UNIT OWNER OPERATOR

By Gary Occhiogrosso, Founder, Franchise Growths Solutions.

Today, the owner-operator approach remains a powerful path for focused franchisees. Let’s unpack what makes it compelling and what makes it challenging. Owning and operating one unit of a franchise gives you complete control and direct involvement in every aspect of the business. That closeness brings benefits and tradeoffs.

Pros

  • Lower startup and operating costs

Because you are hands-on, there is no need to hire a general manager. You can save on labor and overhead. Startup investment tends to be lower for a single unit than for a multi-unit deal.

  • Ideal for newcomers

First-time franchisees benefit by learning the business in detail. You become immersed in the system and process without the complexity of multiple units.

  • Complete operational control

You hire your team, handle expenses, maintain quality, and deliver a consistent customer experience day after day.

  • Sharper focus and fewer pitfalls

Managing one location means fewer moving parts and less risk of failure cascading across units. You can respond quickly when tasks or problems emerge.

Cons

  • Time demands and stress

As the owner operator, you shoulder full responsibility for service delivery, staffing, day-to-day admin, and finances. Your schedule may skew heavily toward operational hours until routines are well established.

  • Limited scalability

If growth is on your horizon, a single-unit model becomes impractical. You will need to transition into hiring managers or shift toward a multi-unit structure for expansion.

  • Dependent on one location

Your income, reputation, and exit strategy hinge on the success of that single unit. No diversification means more vulnerability if local demand shifts or competition increases.

  • Potential lack of pricing leverage

Single units cannot negotiate volume discounts and supplier deals the way multi-unit portfolios can. Your purchasing power is limited.

Looking Ahead

For entrepreneurs starting out, especially couples or those leaving corporate employment, the single-unit owner-operator franchise remains a logical launchpad. It offers direct exposure to operations, solid financial upside when managed well, and smoother navigation of franchisor support systems.

But it is inherently unsustainable as a growth model beyond the first business. A forward-thinking owner should plan exits, consider geographic or brand expansion, and understand when to shift into management or semi-absentee modes.

Summary Table

Benefit Drawback
Lower costs and investment Heavy personal time and effort
Full control and insight Growth is difficult without hiring
Fewer moving parts  Earnings tied to one location
Ideal for first time owners Minimal supplier negotiating leverage

In the realm of franchising, owning a single unit remains the traditional entry path. The simplicity and affordability attract new entrepreneurs and owner-operators who want to run the business themselves. Yet keeping that model requires relentless hands-on engagement, and it slows down scale. If long-term growth matters to you more than hands-on control, the right move may be to begin with one unit and plan early for expansion.

 

Copyright Gary Occhiogrosso. All rights reserved worldwide.

Sources:

  1. https://www.franchiseexpo.com/blog/owner-operator-franchises
  2. https://www.ifpg.org/buying-a-franchise/different-types-of-franchise-ownership
  3. https://elitefranchisemagazine.co.uk/insight/item/which-is-the-best-type-of-franchise-owner-operator-or-a-management-franchise
  4. https://www.fgllegal.com/blog/2024/04/choosing-between-single-unit-and-multi-unit-franchises
  5. https://www.mbbmanagement.com/blog/reasons-why-multi-unit-are-smarter-than-single-unit-franchises
  6. https://www.jackintheboxfranchising.com/blog/pros-cons-owning-franchise
  7. https://msaworldwide.com/basics-of-franchising/the-differences-between-single-unit-and-multi-unit-franchise-ownership

 

 

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This article was researched, outlined and edited with the support of A.I.

EXPLORING FINANCING OPTIONS FOR YOUR FRANCHISE INVESTMENT

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Financing a franchise is a crucial step in turning your entrepreneurial vision into reality. Whether you’re considering SBA franchise loans, bank financing, or self-funding your franchise, understanding your options is key to making an informed decision. By evaluating the pros and cons of each method, you can choose the best strategy to launch and grow your business successfully.

 

EXPLORING FINANCING OPTIONS FOR YOUR FRANCHISE INVESTMENT

By FMM Contributor

Starting a franchise is an exciting opportunity, but securing the right funding is a crucial step in the investment process. Understanding your financing options can help you make an informed decision that aligns with your financial situation and business goals. Below, we explore some of the most common methods for funding a franchise.

Using Personal Savings to Fund Your Franchise

If you’ve been planning to invest in a franchise and have built up savings specifically for this purpose, you may be able to self-fund your investment. This approach allows you to avoid debt and maintain full financial control over your business. While using personal savings eliminates interest payments and loan obligations, it’s essential to consider how this decision might impact your financial security and liquidity.

Bank Financing Options

Banks offer two primary financing options for franchisees: term loans and lines of credit. A term loan provides a lump sum of capital that must be repaid over a fixed period, along with interest. Alternatively, a line of credit gives you flexible access to funds that you can draw from as needed, with interest only applied to the amount borrowed. Since banks often offer the best business loans for franchises to existing customers, it’s advisable to start by exploring financing options with your current bank.

SBA Loans for Franchise Financing

The Small Business Administration (SBA) supports entrepreneurs by guaranteeing loans provided by approved lenders. This government backing reduces risk for lenders, enabling them to offer SBA franchise loans with lower interest rates and more favorable terms. These loans are a popular choice among franchisees due to their competitive rates and extended repayment periods. However, they often require thorough documentation and a strong credit profile to qualify.

Financing Through Friends and Family

Turning to friends and family for financial support is another common way to fund a franchise. This method can provide flexible repayment terms and avoid the complexities of traditional lending. However, borrowing from personal connections can create financial strain and impact relationships if repayment challenges arise. To protect both parties, it’s advisable to document loan agreements clearly and establish repayment expectations from the outset.

Using Retirement Accounts for Franchise Funding

A Rollover as Business Startup (ROBS) allows entrepreneurs to use retirement savings for franchise investment without incurring early withdrawal penalties. This strategy involves rolling over funds from an existing retirement account to purchase stock in the new business. While ROBS provides a way to invest without taking on debt, it requires careful structuring and compliance with IRS regulations. A qualified professional should oversee the process to ensure legal adherence and minimize risks.

Franchisor-Provided Financing

Some well-established franchise brands offer franchisor financing programs to support new franchisees. These financing programs are often designed with the franchisor’s business model in mind, making them a convenient and streamlined option. In many cases, these programs are based on the franchisor’s financial stability rather than the individual creditworthiness of the franchisee, making it easier for qualified candidates to secure funding.

Alternative Franchise Financing Options

Beyond traditional loans, alternative franchise financing methods such as equipment financing or crowdfunding can help fund specific needs within your business. These options may provide more flexibility compared to conventional loans, depending on the franchise’s operational model and funding requirements.

Conclusion

Choosing the right franchise financing option is a critical step in launching a successful franchise. Whether you opt for self-funding a franchise, SBA loans, retirement fund rollovers, or franchisor financing, each method comes with its own set of advantages and considerations. By evaluating your financial situation and working with experienced professionals, you can secure the funding that best supports your franchise investment goals.

Sources:

  1. NerdWallet – Best Small Business Franchise Loans
  2. Jack in the Box Franchising – Best Ways to Finance a Franchise
  3. Wikipedia – Guidant Financial & ROBS Overview
  4. Speritas Capital – Three Creative Ways to Finance Franchises
  5. U.S. Small Business Administration (SBA) – Franchise Loans
  6. Investopedia – Franchise Financing Options
  7. Forbes – How to Get a Small Business Loan
  8. Franchise Direct – Funding Your Franchise Investment
  9. Entrepreneur Magazine – How to Finance a Franchise Business
  10. Franchise Gator – Financing Your Franchise: What You Need to Know

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This article was researched, outlined and edited with the support of A.I.