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Franchising has always been a popular business model for those looking to own a business with a proven track record. However, the traditional franchise model often requires a hands-on approach, which may not be ideal for everyone. Enter the CEO model—a game-changer in the franchising world designed for semi-absentee investors who prefer working on the business rather than in it. In this post, we will explore what the CEO model is, how it works, and why it might be the perfect opportunity for you.
What is the CEO Model?
The CEO model is a semi-absentee business model tailored for franchise owners who want to manage their businesses without being involved in day-to-day operations. This model is particularly suited for a painting company but will soon be rolled out to other brands. The primary appeal of the CEO model is that it allows investors to focus on strategic growth while delegating operational tasks to hired professionals.
Key Roles and Structure
Regional Director
The first critical hire in the CEO model is the regional director. This individual is responsible for building and managing a team of location managers. The regional director plays a pivotal role in driving sales and ensuring that the business operates smoothly across multiple territories. Typically, investors need to purchase and manage five territories, which are usually geographically close but can also be spread out.
Location Managers
Location managers are essential to the CEO model's success. They handle the day-to-day operations within their designated territories. Their primary responsibilities include driving sales, managing subcontractors, and ensuring customer satisfaction. By focusing on these key areas, location managers free up the investor to concentrate on broader business strategies.
How the CEO Model Operates
Subcontractor Model
One of the unique aspects of the CEO model is its subcontractor model. This approach allows the business to operate without the need for a traditional brick-and-mortar setup. About 90% of the work is residential, with some commercial painting jobs included. Subcontractors handle the actual painting work, while the regional director and location managers focus on sales and operations.
Marketing and Support
The franchisor provides robust support through an internal marketing department, which helps generate qualified leads. This marketing support ensures a steady stream of potential customers, which the location managers can then convert into sales. Ongoing training and a call center further support the franchisee, ensuring that all team members are equipped with the necessary skills and knowledge.
Investment and Growth Potential
Initial Investment
The all-in investment for a five-territory franchise under the CEO model is approximately $510,000. This investment covers various costs, including hiring key personnel, marketing, and initial setup. Potential investors are advised to thoroughly review the Franchise Disclosure Document (FDD) and perform due diligence before committing.
Managed Model Option
For those with more capital, there's an option to opt for a fully managed model, which requires an investment of around $2 million. In this model, the franchisor manages the entire operation, allowing the investor to be completely hands-off.
Why Choose the CEO Model?
Flexibility for Corporate Professionals
Many corporate professionals looking to transition into business ownership find the CEO model appealing. It allows them to maintain their current jobs while building a business on the side. This flexibility is particularly attractive to those earning six-figure salaries who want to create additional revenue streams and eventual independence from their corporate roles.
Multi-Brand Franchising
The CEO model also opens the door to multi-brand franchising. Investors can diversify their portfolios by owning different types of franchises, such as a garage company offering epoxy floor services. This diversification not only spreads risk but also provides multiple revenue streams.
Legacy Building and Tax Benefits
Owning a franchise under the CEO model offers potential tax benefits and opportunities for legacy building. Investors can involve their families in the business, creating a lasting legacy. Additionally, owning a small business can provide tax advantages, especially when combined with a W2 income.
Conclusion
The CEO model is an innovative approach to franchising that offers semi-absentee investors a unique opportunity to own and grow a business without being involved in daily operations. With key roles like regional directors and location managers, robust marketing and support from the franchisor, and significant growth potential, the CEO model is worth exploring. Whether you're a corporate professional looking to transition into business ownership or an investor seeking to diversify your portfolio, the CEO model could be the perfect fit for you.