Home-Based Franchise Industry Report

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After working as an operating room nurse for 20 years, I wanted to do something that would broaden my horizons and allow me to share my love of travel with others. With hard work and the exceptional training, marketing assistance and all round support from the home office, I am now a full-time, home-based travel professional. Joining the Cruise Planners family was the best career choice I’ve ever made!

~ Joel Wilder, RN, MCC

A home-based franchise is—you guessed it—operated primarily out of one’s residence. The word “primarily” is used because a significant portion of franchises categorized as home-based are mobile franchises, franchises where business activities such as a sales visit or completing a service may take place on-site somewhere else. However, if the administrative functions are handled at a franchisee’s residence it’s considered home-based.

There used to be a stigma attached to home-based businesses. However, that perception has virtually disappeared—especially after the pandemic introduced so many to the work-from-home lifestyle. Home-based companies are now a fully established way of doing business.

Consider the following fast facts about home-based business in the United States:

Per the Small Business Administration, over 51% of all small businesses in the United States are home based businesses.
Home based businesses generate nearly $430 billion per year nationally.
It’s estimated another home-based business starts every 12 seconds.
70% of home-based businesses can still be termed as “successful” after three years of founding.
Approximately 60% of home-based businesses do not have additional employees.

Home-based franchises cover a wide span of types. Home-based franchises can be found in the following industries and more:

Three Big Reasons Home-Based Businesses Are So Attractive

Lower Financial Investment: One of the most alluring attributes of a home-based franchise is a generally lower financial investment — a considerable advantage when access to funding is limited. In fact, 64% of small business owners start with $10,000 or less, and are primarily self-funded. Home-based franchisees typically save on overhead costs such as construction, rent and the other carrying costs of a separate place of business such as utility bills, fuel costs, and more.

Time Efficiency: The benefits here can be two-fold. One, there are certain home-based franchise concepts that can be open for business within a matter of weeks instead of months. Secondly, the day-to-day operation of a home-based franchise can also dramatically reduce – and in some cases eliminate – commute time. Even if the business involves serving others outside the home, for example cleaning or maintenance services, the ability to carry out administrative and sales duties from home often allows franchisees to circumvent the peak times of commuter traffic.

Schedule Flexibility: Going hand-and-hand with time efficiency, daily life has become increasingly hectic and finding the time to focus on personal pursuits can be challenging. Generating income through a home-based franchise allows franchisees to control their time for activities in a way that other business setups may not allow.

The Rise of the “Parentpreneur” in Home-Based Franchising

A significantly growing segment of home-based franchisees is parents. Coined “parentpreneurs,” these parents are seeking work arrangements that allow them to mold their careers around their parental commitments: taking kids to school each day, along with shuttling kids after school activities and medical appointments, etc.

Increasingly, these parentpreneurs are turning to franchising. As Fiona Simpson, founder of UK-based ARTventurers, a children’s art and creative play franchise, wrote in an editorial for Forbes the reasoning is largely two-fold.

The first reason is because a great deal of the foundation of starting a business has been done by the franchisor.

“Many parents, if they have young dependents at home, are likely to have a more cautious approach to investment and so this immediately makes a franchise opportunity an attractive proposition,” she says. “And as you’re joining a brand where the product or service is already developed and the systems and procedures are already in place, as a franchisee you’ll be up and running and taking cash into the business far more quickly than if you were starting from scratch and having to go through all of the development stages.”

The second big reason is flexibility.

“Working at home allows many parents to spend more time with their children during school vacations whilst still working, and might even mean that they can keep young children out of daycare,” Fiona says. “Within my own franchise network our franchisees (primarily moms) do report that [at the end of the school year and during summer vacation] owning their own franchise business really does come into its own, from being able to attend all of the end-of-year assemblies, sports days and parent-teacher conferences, as well as navigating the vacations and continue to work with children in tow.”

And by virtually all indications, the worker-parent balancing act has only become more challenging since the onset of the pandemic. According to Pew Research, “Amid pandemic-related school and day care closures, many working parents are juggling child care duties while they work. Among employed parents who are working remotely all or most of the time and have children younger than 18 at home, about two-thirds (65%) say they have at least some child care responsibilities when working from home, including 26% who say they have a lot.”

While there is no fail-safe business out there, with the proper amount of effort many parents are finding out that franchising can assist them in achieving their career goals while simultaneously managing their home life.

Staying Sane in a Home-Based or Mobile Franchise

If you are a reader of our blog (and why wouldn't you be!), you're familiar with the name Anne Daniells. Anne has been a regular contributor to our blog in recent years, often writing on business culture from her years of corporate and entrepreneurial experience—including franchise ownership. She also has significant experience working from home, a decision she says was “based mostly on lifestyle.”

Owning a mobile or home-based franchise can present unique challenges vs. having a physical location. Below, in a snippet from her original post for us on the topic, are five tips from Anne on things you can do to stave of the feelings of isolation and mental fatigue that many have felt running a home-based franchise.

Get creative. “When we are solving problems for customers, and keeping track of appointments and account needs, we use our left brain to organize our thoughts and tasks. It is an amazing machine, but it needs to be stretched and exercised on the other side too. If you’ve lamented the painting or photography you once loved, use your franchise as a reason to pay attention to it, not avoid it. By switching off the “work” side of your mind and nurturing your creative, right brain, you and your business can flourish.”

Planning and routines. “No one is telling me when to work, but without a plan, failure is more likely. Each day’s routine can be the one I choose to foster. From morning lattes before a slew of meetings to keeping with a strict bedtime, staying true to a plan and revisiting it when necessary, keeps me focused. Just knowing I can work in pajamas doesn’t mean I should, so having some behavioral guidelines is wise.”

Planning and routines in Home-Based Franchise

Take a physical and mental break. “All research supports a break to maintain high productivity. Even though it seems counter-productive, a break boosts your work quality. Do a crossword puzzle, incorporate some stretching, or simply get up and walk to the mailbox. There are free apps that will remind you to take your break if you need it too. Just give the brain a rest and get out of your chair to keep yourself healthy all over.”

Change the scenery. “Even the best locations get old, and our brains need something new. While I love my quiet home office with its large window, sleeping cat, and a printer within reach, sometimes it becomes a cage where emails reign and the clock speeds forward while the work sits incomplete. Setting up office in the kitchen or on the breezy covered patio works wonders for focus. Or work at your “café office” once a week if that suits you. Stay out of a rut by changing up the scenery. Your mind will thank you with peacefulness and better output.”

Playtime matters. “Maybe it’s a mid-day swim or a long walk in the rain with the dog, but something that gets you laughing, moving, and completely not thinking about work will keep your mind intact. If exercise or animals aren’t your style, watching your favorite comedy for an hour can refresh your mind and get you back to work with a smile.”

In addition, to keep your mobile and/or home-based franchise running smoothly, here are a few more tips to avoid some common headaches:

Keep your boundaries in place. Operating a franchise at home or one that you can essentially take with you can blur the line between work and personal time.

Stay on top of your advertising and marketing. Since you won’t have “walk-in” traffic to your franchise, you will need to steadily invest in getting awareness out about your services. This is an area where the established programs of a franchise system can really help.

If you’re using your vehicle for both work and personal use, keep detailed notes. Business driving expenses are tax deductible, but the regulations are complex and should be discussed with a tax professional.

Opening a Home-Based Franchise

Please note: the provisions and fees described below are some of the most common and not a complete listing. Please review the Franchise Disclosure Document (FDD) of a franchise for all of the provisions and fees related to investing in that particular franchise.

The Research Process

One of the biggest attractions of a home-based franchise is that they tend to be lower in cost—both in terms of opening and ongoing costs. However, it’s important to remember that a home-based franchise takes just as much effort as one with an out-of-home location. Or, as Ed Teixeira of Franchise Grade puts it, “A low franchise investment doesn’t necessarily convert into less business skills or effort required by the franchisee.”

And that effort starts well before the franchise is even open for business. In addition to the home-based franchises available, there are many work-from-home opportunities that fall under the category of business opportunities—an area where formal regulation has lagged behind franchising.

However, while there are several reputable business opportunities out there, some untrustworthy people out there use work-from-home scams to make money. To aid in your due diligence, there are places you can research a company’s background such as 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.

There’s also the Federal Trade Commission’s Business Opportunity Rule, which in 2011 introduced a provision for a disclosure document similar to that of the Franchise Disclosure Document. More information on the Business Opportunity Rule and what the disclosure document covers can be found here.

Initial and Opening Costs

While home-based franchises typically cost less when compared to other franchise types, the amount necessary to open a home-based franchise varies depending on the unique business system and execution requirements for a particular franchise just like in any other franchise industry.

Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the Franchise Disclosure Document (FDD) is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.

Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.

Ongoing Franchise Fees

Throughout the length of the agreement there are costs for being a part of the franchisor’s business system. These costs include expenses such as royalty fees, marketing fees, software fees, training fees, and more.

The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support.

In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training. Prior to investing, prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs.

For more information on a number of franchises you can run from home, please see our home-based franchise industry profiles.

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