Greg Mohr is a WSJ bestselling author and CEO of Franchise Maven.
In today’s turbulent economic climate, many investors are reevaluating their paths to financial freedom. Real estate, stocks and startups have long been seen as the standard pillars of wealth-building, but each carries its own headaches: market volatility, tenant issues, regulatory shifts and time-consuming management.
I’ve noticed a growing number of investors are finding a new path to scalable, cash-flowing income through a vehicle that has flown under the radar for too long: franchising.
As CEO of a franchise consulting company, real estate investors have been some of my best clients. They have already worked with many companies and industries that are involved in property maintenance, like HVAC, plumbing, electrical, groundskeeping, general maintenance and others. This often makes investing into one of these industries an easy transition.
From Tenants To Teams
Many real estate investors are discovering the advantages of owning a business with built-in systems, support and staffing through franchising. With semi-absentee franchise models, they no longer need to worry about emergency maintenance calls or late-night tenant issues. They build wealth through teams, not tenants.
Franchises offer things that traditional real estate often can’t: brand recognition, marketing playbooks, operational support and proven systems. Investors step into a structured environment with clear expectations, performance benchmarks and resources to help them scale.
Another key differentiator is the speed to revenue. Unlike traditional startups that may take years to become profitable, many franchise models are designed for quicker ramp-up periods. With prebuilt infrastructure, onboarding support and brand momentum, franchise owners can often reach breakeven in a fraction of the time.
A quicker ramp up period is one of the things to look for in a franchise. Investors typically look for the franchise to get them to where they want to be two to three years quicker than doing it themselves.
Semi-Passive Still Means Strategic
One of the most compelling elements of modern franchising is the rise of the semi-absentee ownership model. These businesses allow investors to own the assets while hiring managers to run day-to-day operations. The owner typically spends 10 to 15 hours a week overseeing financials, guiding strategy or simply checking in. Keep in mind that this will vary by franchise. I always tell my people to find out what “semi-passive” really means for a particular franchise.
This model can provide scalability without burning out the investor—a welcome contrast to managing dozens of rental properties or overseeing a portfolio of rehabs. It also enables investors to build a portfolio of multiple units or even diversify across industries.
However, semi-passive doesn’t mean set-it-and-forget-it. Success still requires strategic oversight, strong communication with the operator or manager and a willingness to stay engaged with performance and metrics. In other words, you’re not just buying a job—you’re building an asset.
I often tell clients: Your role is to be the CEO, not the operator. Lead with vision. Hold your team accountable, and protect your margins. That’s the semi-passive sweet spot.
I must add here one question I always ask my people: “What are you prepared to give up to win in your first 12 to 24 months?” This is not a get-rich-quick plan. It does take time and effort.
Real Numbers, Real Businesses
While real estate returns often hover between 6% and 12% annually (after expenses), I’ve found many franchise models generate EBITDA margins of 15% to 30% or more. And some franchises generate $1 million-plus in average gross revenue, even with part-time owner involvement.
The key? Choosing the right franchise based on industry, operating model and market demand. Home services, health and wellness, senior care and staffing are just a few industries showing consistent growth with scalable potential.
In addition to stronger margins, many franchises provide recurring revenue models. Think memberships, monthly service plans and subscription-based offerings. These models create predictable cash flow and long-term customer value.
I once worked with a couple who owned several rental properties. After walking through their numbers, they realized their new territory in a wellness franchise would net more annually than four of those rentals combined—without the tenant drama. That’s the power of recurring services with operational leverage.
Tackling The Challenges
One challenge I see often—especially among real estate investors getting into franchising—is expecting the same kind of passive experience. Real estate can be pretty hands-off once you’ve got a good tenant and property manager. But even a semi-absentee franchise requires strategic involvement, especially early on. You’ve got to hire the right manager, dial in operations and track performance from day one. Skip that, and the “passive” dream falls apart quickly.
Another mistake is picking a franchise based on personal passion instead of performance. I’ve had investors tell me they love fitness or food and want to “do something fun.” But if the margins are thin, the staff turnover is high and you can’t scale without constant oversight, it turns into a second job—not a second income stream.
My advice is simple: Treat this like a business, not a hobby. Look at EBITDA, time commitment, recurring revenue and team structure. That’s how you make a smart transition—from bricks to brands—with your cash flow intact.
Strategic, Not Just Safe
Today’s franchise investors are not just retirees or laid-off workers looking for their next gig. They’re CEOs, tech professionals and real estate investors looking to diversify their portfolio, secure recurring revenue and build sellable assets.
Franchising offers both income and an exit strategy. It’s strategic wealth-building with fewer unknowns than a traditional startup, and more scalability than a single rental unit or stock portfolio.
Plus, franchises can be expanded or resold—giving owners a true equity play. Many investors build multi-unit operations or grow to multiple markets with the support of the franchisor’s systems and training. With a solid team in place, they can step further back while maintaining strong margins. That is the key here, building successful teams and having processes in place so the business does not revolve around you.
The Bottom Line
Franchising is no longer just for burger joints and auto shops. It’s a sophisticated, scalable investment strategy for those looking to build cash flow, free up their time and control their future.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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