Pros & Cons of Non-Brick-and-Mortar Service Brands

One thing franchisees learned during Covid is that recession-resistant brands are not necessarily pandemic-resistant. Not even service brands, unless they’re declared essential. Any service business requiring a physical, brick-and-mortar retail site – from hair salons to gyms – was severely affected by mandated closures and occupancy restrictions in 2020.

And while sit-down, dine-in restaurants were similarly afflicted, those able to quickly adapt by adding or expanding their takeout or delivery services managed to get through relatively unscathed, although buffet-style restaurants were hit hard with many closing permanently. And by now it’s common knowledge that in the “Year of the Drive-Thru,” QSRs and other food concepts were able to surf the pandemic wave successfully in 2020.

No matter how they fared in the past year, franchisees in all sectors took a step back to consider their fate in a future pandemic, which many predict is inevitable. Many are now exploring investments in “essential” businesses, many of which are non-brick-and-mortar service brands. These include home repair and maintenance, moving, junk removal, mobile pet care, senior home care, travel services, and many more.

For many multi-unit and multi-brand franchisors in food or other retail-based sectors, a franchise without a physical location is a horse of a different color. What, no landlord and lease negotiations? No buildout costs? No contractors to deal with? Yet despite the logical appeal of a non-brick-and-mortar concept, somehow it just doesn’t feel right to operators accustomed to brands with a retail presence, more unfamiliar than taking their current brands into a new market.

So let’s look at some similarities. All franchisors want candidates who follow their system, pay royalties on time, possess marketing skills and savvy, know how to run a business, show leadership and growth potential, are good communicators, and are expansion-minded, community-oriented, and willing to give back to the system.

They also seek candidates able to balance their professional and personal lives (although for some, a willingness to work 60- to 80-hour weeks, at least for the first several months, can be a plus); who move easily between all the different roles demanded of a franchisee; and who believe in the product or service so strongly that they become a brand ambassador, even an evangelist. Any successful existing franchisee, no matter what industry they’re in, should fit this description.

In the services sector, many opportunities are home-based businesses. For example, you can have a home-based service business such as business coaching; pool maintenance with a fleet of vehicles managed from home; or a financial advising business where you visit clients (at least before Covid) and then work from home doing research.

If you’re looking to add one or more of these non-brick-and-mortar brands to diversify your portfolio, it’s crucial to weigh and balance all the moving parts, the pros and cons, the benefits and pitfalls. For home-based businesses, for example, the pros include a lower investment to start since there’s no real estate, build-out costs, and equipment to install – although there may be vehicles and wrapping involved. There’s also usually a quicker path to a positive cash flow.

The cons include lower earning potential, potential loneliness for those used to being around a busy crew, and the possibility of not being able to “turn it off” when it’s family time. Setting boundaries can be more difficult when you work from home. Call it mission or job creep. As ever, with any choice there are tradeoffs.

Franchisors in the service sector will want to know that you actually like and have an aptitude for serving and helping people solve their problems – whether you do it directly, or hire a staff or crew to do it for you. In the latter case, you will need people skills to hire, train, manage, and retain staff, whether you’ve chosen home repair and maintenance, lawn and landscaping, or garage remodeling.

You’ll also want to pick a growing sector, one with a future in an expanding marketplace. Senior home care, one of the fastest-growing segments today and into the foreseeable future, checks a lot of boxes for potential franchisees seeking to diversify. The population of seniors in need of home services grows larger every year and will continue to expand in the coming decades, both in the U.S. and overseas. Opportunities in this sector run the gamut from home care and estate planning to medical care, home remodeling, housecleaning, and shopping for the home-bound or infirm.

Other service-based business sectors that don’t require a retail establishment include financial services, B2B, cleaning and maintenance (commercial and residential), technology and communications, children’s supplemental education (online nowadays), pet care, massage, fitness, and more.

One basic factor to consider in evaluating brands in the services sector is that customers are willing to trade money for time. The classic example is maid services: those with enough disposable income and busy, time-starved lives would rather spend the money to have a clean house and free up their time to spend with family and friends. Think opportunity.

Next time: More details on the pros and cons of non-brick-and mortar service brands.