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Home-Based Franchise & Business Opportunity Report 2015

Home-Based Franchise & Business Opportunity Report 2015

Working from home is becoming more popular. And why not? Many businesses in this area, whether a franchise or business opportunity, offer lower start-up costs and the flexibility workers crave.


Home-based businesses are a big part of the small business landscape in the United States. Quick facts:

  • 52% of small businesses in the United States are home-based.
  • 1 in 4 home-based workers are employed in management, business, or financial occupations.
  • Boulder, Colorado, has the highest percentage of home-based workers: 10.9%.


There aren’t many industries that don’t have at least one segment that lends itself well to home-based operations. Here are some of the most popular:

  • Cleaning
  • Senior Care
  • Tutoring
  • Computer Repair
  • Business Services
  • Internet Retail
  • Home Services
  • Vending


According to the Census Bureau, there are two types of home-based work: home and mixed. Home is straightforward, it’s an arrangement where the person only works from his or her residence. Whereas, mixed is still home-based in terms of administration work, but the person completes some to all of the actual job functions somewhere else.


Fast facts on both:

Home Workers

Mixed Workers

  • Median age: 47.5
  • Median salary: $25,500
  • Hours worked: 37.4
  • 50.5% have a bachelor’s degree or higher
  • Median age: 45.5
  • Median salary: $52,800
  • Hours worked: 41.4
  • 63.3% have a bachelor’s degree or higher


There are several reasons to start a home-based business or franchise, such as testing out potential or new career avenues before fully committing; however, most reasons people want to start a home-based business or franchise boil down to the desire for more income.


 ‘‘Certainly, for much of the workforce, real wages have been stagnant in recent years.’’ ~ Janet Yellen, Federal Reserve chair in February 2014

Home-Based Franchise & Business Opportunity Report 2015


Household incomes in the United States have been flat for the past few years. In fact, the median household income for 2014 fell 1.5 percent from 2013, after being adjusted for inflation. Conversely, average expenditures went up by about one percent for the year, between July 2013 and July 2014. Overall, the US median household income is 6.5 percent lower than pre-recession levels in 2007, and 7.2 percent lower than its peak in 1999. Some workers choose to bridge the gap between their pay and their expenses (including wants) by taking on a second job.


About 5 percent of working adults in the United States has more than one job—a rate that has been steady since 2010. About half of these workers have a full-time and a part-time position.


It should be noted that the percentage of those workers who have more than one job could be higher because of so-called “underground economy” jobs where cash is exchanged, such as babysitting, handyman work, tutoring, computer repair, or other tasks. A number of workers have also been taking freelancing jobs for income.


A notable subset of those looking for extra income are parents. For parents, child care expenses are a major cause for needing extra income. According to the National Association of Child Care Resource & Referral Agencies (NACCRRA), the average cost of center-based daycare for babies and toddlers in the United States is $11,666 per year ($972 a month). Costs for preschool-age children averages $8,800 a year ($733 a month).


To offset these costs, a number of family units decide to have one parent stay at home, if possible. Usually, this parent is the mother. Of married couples where only one spouse is employed, the husband is the only worker in 19.9 percent of married-couple families, while the wife is the only worker in 7.5 percent of these families, according to the Bureau of Labor Statistics.


The latest figures estimate that 29 percent of mothers don’t work outside the home. Stay-at-home moms already provide a lot by assuming primary care of a child, but bringing some extra household income via a home-based business or franchise is always a good thing.


But don’t forget about dads. The percentage of fathers reporting work-life conflict has increased significantly since the 1970s. Back then, only six men in the entire United States identified as stay-at-home dads, according to a census data analysis done by Karen Kramer, a professor at the University of Illinois at Urbana-Champaign. Now dads account for approximately 16 percent of the stay-at-home population, although the number is hard to pinpoint because the Census Bureau has a more narrow definition of stay-at-home fathers than mothers.

Home-Based Franchise & Business Opportunity Report 2015


As with all workers who are home-based, the worker’s personal skill will determine what business opportunity or franchise will be a good match. Yet, there are some areas that have proven successful for stay-at-home parents including, but not limited to:

  • Child Care
  • Accounting and Financial
  • Medical Billing
  • Tutoring
  • Craft Work
  • Retail


How to Make a Home-Based Franchise or Business Opportunity Work for You

Home-based franchises and business opportunities offer a great deal of convenience. But many of the benefits of a home-based franchise can actually turn out to be a challenge if a strategy isn’t planned out ahead of time.


The first thing to do is a little self-evaluation. Here are some questions to ask yourself:

  • Is a home-based business a smart move not just for you personally, but your family too (if applicable)?
  • Are you willing to learn all of the functions you have to perform to keep your business afloat (i.e. CEO, office manager, customer service, IT, etc.)?
  • Do you work well without supervision?
  • Are you good at time management?
  • Are you good at networking?


Discipline is a big sticking point. Without a manager to report to, or even a storefront that must be open at a certain time, it’s important to make sure you are disciplined enough to maintain profitability away from the structure of a traditional employment situation.


Tips for success:

  • Have a separate space for work-related functions. On days you’re having trouble focusing at home, you can go to a coffee shop or shared office space, if necessary.
  • Set a working schedule for yourself that you can follow to stay on track. But give yourself some leeway. Daily meetings and appointments can throw you off occasionally, but having an ideal schedule for the day will keep you accountable.
  • Invest significantly in local marketing. With no storefront, it becomes essential that you create a strong presence in your market through online marketing and local PR.

Home-Based Franchise & Business Opportunity Report 2015


Avoiding Scams

When starting a new venture, people understandably want to know what they’re getting into. Some gravitate toward franchises because of the amount of regulation done within the industry. The presence of the Franchise Disclosure Document (FDD)—a government-required document detailing a franchise’s operation—is a major part of this. In addition, some states require franchises register with them in order to operate within their jurisdiction.


Still, many work-from-home opportunities fall under the category of business opportunities—a less regulated space. Unfortunately, there are a number people that are untrustworthy and use work-from-home scams to make money. To aid in helping interested parties avoid work-from-home scams, the Federal Trade Commission (FTC) has created the Business Opportunity Rule.


Under the Business Opportunity Rule, sellers have to give you, as the buyer, a disclosure document at least seven days before you sign a contract or pay the seller for the business opportunity. Although not as thorough as the FDD, the information from the document can be used to fact-check what the seller tells you about the opportunity and what you’ve discovered from your own due diligence (research).


The business opportunity disclosure document has to:

  • Identify the seller
  • Divulge info about certain lawsuits or other legal actions involving the seller or its key personnel
  • Explain if the seller has a cancellation or refund policy. If so, the terms of that policy.
  • Clarify whether the seller is making an earnings claim (i.e. “Earn up to $100,000 a year”). If so, the seller has to provide another document called an earnings claim statement.
  • Give a list of references

Home-Based Franchise & Business Opportunity Report 2015


If the business opportunity makes a claim that necessitates an earnings claim statement, it must include:

  • The name of the person making the claim and the date
  • The specifics of the claim
  • The period of time in which those earnings were achieved with a start and end date
  • The number of people who got those results or better, and it’s percentage of the system
  • Any information about those people that may differ from the buyer (e.g. the part of the country where they live)
  • A statement that the buyer can get written proof of the seller's earning claims if the buyer requests it


The Business Opportunity Rule also makes clear certain practices that are against the law, for example:

  • Sellers can't claim they're offering you a job when they're really promoting a business opportunity.
  • It's illegal for business opportunity sellers to say anything that contradicts what's in their disclosure document or earnings statement.
  • Sellers cannot misrepresent the investment (e.g. say you will have an exclusive territory when you won’t.)


Ultimately, for either a franchise or a business opportunity, it is up to the buyer to perform their own due diligence to make an informed decision. In addition to online search and speaking with others who work with the company, you can check out a company with your local consumer protection agency, your state Attorney General, or the Better Business Bureau. Remember not only to look them up where you live, but where the company is based as well.


Additionally, strongly consider seeking professional advice. Ask a lawyer, accountant, or other business advisor to go over the paperwork with you before you sign.


Home-Based Franchise or Business Opportunity Investment

Please note: the provisions and fees illustrated below are some of the most common and not a complete listing. Please review the FDD of a franchise or the disclosure document of a business opportunity for all of the provisions and fees related to investing in that particular home-based business.


Before committing to a franchise or business opportunity, be sure to check your area-specific regulations for home-based businesses.


Like all business owners, you will be ultimately responsible for complying with all local, state and federal laws and regulations applicable to the operation of your franchise or business. Make sure your local government agrees that you can work from home. Some areas have zoning laws that completely prohibit businesses from operating in a residential area; however, many locales only limit certain business activities.


Homeowners associations also may have regulations related to the operation of a home-based business, such as restrictions on parking a decaled vehicle in driveways. It is of utmost importance that you research legal restrictions on doing business out of your home in your area before signing any agreements.


The amount necessary to open a home-based business varies depending on the unique business system and execution requirements.


While both provide a set operational framework, business opportunities and franchises generally differ in the amount of support they offer. This difference in support plays a large part in why business opportunities typically cost less to start than franchises.


Initial costs associated with opening a franchise include regular business start-up costs plus the franchise fee and training expenses (such as travel and living expenses, not the actual training courses). For reference, here are some investment ranges for 10 home-based franchises.

Estimated Initial Investment Ranges for Sample Home-Based Franchises

*Includes a rent or real estate estimate for those who would rather work at a more traditional job site, typically reflected in the higher estimate figure.


Don’t forget about the ongoing fees as well when setting your budget.


The most common difference between business opportunities and franchises in terms of ongoing fees are royalty fees. The lion’s share of franchises charge this fee for the continued use of the franchisor’s trademarks and patented processes.



Aussie Pet Mobile

Gross Volume, multiplied by the applicable royalty rate (varies from 4% to 8%). The current Monthly Minimum Payment is $612.

Bricks 4 Kidz

7% of Gross Receipts; Minimum $1,500 every 12 Accounting Periods


$350 per month


The Royalty Fee is a percentage of Annual Commissionable Sales (excluding those relating to travel insurance) not exceeding $22,500 (the Annual Royalty Fee Cap) as calculated.

Fresh Healthy Vending

6% of the Monthly Gross Revenue of each Vending Machine; 12% of Monthly Gross Revenue of each Micro Market (including merchant service fees).

Home Helpers

6% down to 3% of Gross Revenues; $300 monthly minimum for 1st 2 years; $1,800 monthly minimum after 1st 2 years.

Maid Simple

19% of gross sales during the first year of operation, then between 15-19% after that, depending on the franchisee’s gross revenue.

Sit Means Sit

$600 per month. If paid on the first day of the calendar month that is not a weekend day or a holiday, the Continuing Royalty will be $500 for that calendar month only.


The greater of 6% of Gross Revenues or $300 per month.

Tutor Doctor

$10,000 charged to prospective franchisees at the time of transfer, plus any applicable broker or commission fees.


Business opportunities typically allow for usage of their marks without the recurring fee. An advantage of franchise fees is that they also cover items such as regular training and system updates, which many business opportunities don’t provide.


Other regular ongoing fees for both kinds of business systems include advertising or marketing, along with software and technology costs. In addition to regularly paid fees, there are other fees that come up on an “if needed” basis such as audit fees.


To search for a home-based franchise or business opportunity, see our listing here.

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