Retail Franchises vs. Home-Based Franchises: Pros and Cons of Each

Deciding which franchise concept is right for you can be quite the feat. Prospective franchisees must consider financial requirements, lifestyle changes, franchisor support and more. A high-level decision that should be made toward the beginning of the process is whether the prospect is interested in a retail setup or an at-home model.

Either model can thrive, but both have unique advantages and setbacks.

A home-based franchise…

• can be more flexible
• will often have a lower initial investment
• can allow for better work-life balance.

When working from home, franchisees do not have to worry about the cost or work of establishing an external office location. This immediately reduces the initial investment required and typically points to a decrease in long-term overhead costs. Working from home also allows business owners to have more control over when, where and how they work, which can be incredibly appealing to new franchisees looking to maintain a strong work-life balance and family involvement.

However, there are some pitfalls to home-based concepts.

• Relative to a traditional storefront location, a home-based business will have less opportunity for exposure and spontaneous foot traffic. You’ll need to ensure your marketing is up to par.
• Some people just aren’t made to work from home. Depending on the home office setup, you may begin to feel isolated from others and long for the interaction that comes with in-person work. It can also be difficult to work from home amidst distractions like children, pets and chores.
• You will also need to confirm that it is legal to operate a business out of your home. Some local zoning laws prohibit this practice, meaning that it would be essentially impossible to invest in a home-based business in some locales.

Retail concepts are not without disadvantages, either.

• Maintaining a physical location is costly. A franchisee must account for rent, utilities, maintenance and inventory costs, which can add up quickly.
• Retail concepts are often structured in a way that allows standard 9–5 employees to conduct their personal business outside of working hours. This means that a retail franchisee will be responsible for working or recruiting staff to handle “after-hours” work. Be prepared to work long days and weekends and potentially miss out on some of the family and personal functions that may occur during these times.
• Depending on the location of a retail store, there may be competition all around. Careful real estate selection will be crucial to ensure the franchise owner is able to shine. 

Oppositely, having an established storefront has its perks. Most obviously, a retail space creates opportunities for walk-in business. Increased visibility can be very helpful to the growth of the business, and a physical presence within the community serves as a valuable prong of the overall marketing strategy.