Home Based Franchises Require Something Extra
by Ed Teixeira
There are a number of advantages in owning a home based franchise. However,
there can be disadvantages as well. Franchisees and franchisors should focus on
the pros and cons of home based franchises when making their respective
A home based franchise operation can offer a number of advantages for
franchisors and franchisees. Since the franchisee doesn’t need to locate and pay
for a “bricks and mortar” location the initial investment and on-going operating
costs will be lower and because it’s a home based location there will be less
equipment costs. The time needed to start-up the franchise is usually less
compared to a franchise with an offsite location. The overall investment in a
home based franchise is typically lower than for other franchises and has the
added appeal of the franchisee being able to work from home. These features
should make it easier for the franchisor to sell franchises since they can
choose from a higher pool of candidates.
A leading franchise advertising site list 80 home based franchise
opportunities with the following investment breakdown:
- 29 have a capital requirement below $25,000
- 38 have a capital requirement from $25-$50,000
- 13 have a capital requirement above $50,000
Despite the apparent advantages for both franchisors and franchisees, there
are certain aspects of a home based franchise concept that can be problematic.
- The low franchise investment can attract candidates with
weak qualifications. Franchisors may find it much easier to sell
home based franchises with its low investment; however, this
could mean accepting quantity over quality.
- Since the majority of home based franchise concepts are
based upon the franchisee being sales orientated franchisees
with weak selling skills can fail more easily.
- Although the investment is low the possibility of litigation
from disgruntled franchisees still exists.
- Franchisees may find it difficult working from their home.
Some franchisees may lack the discipline to work from home
compared to the structured schedule that a business location
provides. This can lead them to neglecting their business and
going off in other directions.
- Home based franchisees that utilize other employees need
good leadership, management and organizational skills. It can be
difficult managing people from a home based location compared to
a location where employees report to work.
- Home based franchisees should have good computer skills
since they may rely on technology to help them operate their
Home based franchise opportunities provide a viable way for people to own a
franchise for a modest investment. However, this feature can be a double edged
sword since some candidates may not be fully qualified to operate this type of
franchise. When evaluating candidates, franchisors should be aware of the unique
challenges that a home based franchise can present. For their part, prospective
franchisees should consider the particular skills that a home based franchise
requires and determine if they can meet those requirements.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at