Passive Income Franchise: The Key to Recurring Revenue


For many who pursue franchising, the goal is to find a way to earn income without having to put in a lot of hours and/or days actively working. Some may have a full-time job and are looking for supplemental income, while others may be partially retired but still want to remain a part of an industry for which they have a passion. Franchising offers healthy returns for the starting money you invest, allows for diversification of your business holdings, and utilizes brand recognition to help you grow your customer base quickly and maintain customer loyalty.

Challenging Setup, Big Payoff

When planning to open a passive income franchise, one thing to remember is you may have to put in some active work early on to get your franchise to a point where it’s generating a return. By definition, passive income means money you receive without a large amount of active work. This is accomplished by setting up a business that doesn’t require your constant oversight or active supervision. Every business needs people to run the day-to-day operations, but that doesn’t have to be you, the owner. The key to creating a system like this is delegation; you need a manager and staff for each location you own to handle the day-to-day operations. The more hands-off you want your role in the business, the more people you’ll need to handle those duties for you.

Setting up this kind of system can take time, effort, and money. You’ll need to find qualified staff for each franchise location you own, as well as a regional/group-wide manager if you don’t want that duty yourself. Until you find such candidates, you’ll need to handle those duties yourself, and after you find them, you’ll need to arrange for their compensation. All this means a fair bit of work, but it’s only until the system is put in place.

Full or Part-Time Absentee

Some franchisees who are looking for a passive income franchise may not want to take a completely hands-off role in their business. The good news is being a franchisee doesn’t have to be an “all or nothing” proposition. In fact, the best franchise models for creating passive income are often the semi-absentee ones. Full absentee franchise concepts are hard to come by, but semi-absentee ones that only require you to check in periodically are much easier to find.

The Right Qualities

Passive income franchises tend to have certain qualities that you, as a franchisee, should look for when making your selection. One of the first and foremost qualities is having a steady, solid cash flow. For your franchise to allow you to take a passive role, you need to be confident that your constant input isn’t required. That means regular revenue is a must. Managers can only do so much on their own before they have to turn to you, the owner, especially in terms of bringing in customers.

Other important qualities for a passive franchise include:

  • High demand for the products/services.
  • Recession resistance.
  • Scalability of the concept and business model.

Recurring Revenue’s the Key

Considering the important qualities in a passive income franchise, a franchise that uses the recurring revenue model is a great option. Recurring revenue is a business model where you ensure ongoing revenue from repeat purchases. The model accomplishes this through regular payment plans, like memberships, contracts, and subscriptions. If your franchise can utilize this business model, it will provide a number of benefits, including stable cash flow, which is one of the keys to setting up your franchise to generate passive income.

Another highly important quality to the recurring revenue model is how it allows for reliable revenue projections. Because you can gauge the number of memberships/subscriptions/etc. your locations will have, it allows you to more accurately forecast the revenue for a given period. You can also use it to estimate the potential revenue in a local market you’re considering for expansion of your business, which is important for scalability, another key quality for passive franchising.

Customer loyalty is another big benefit to the recurring revenue model. Because your customers are making a long-term commitment to your business for the services and/or products you provide, they’re going to be unlikely to drop you for a competitor. The important thing is to make sure your franchise is delivering the kind of quality that’s expected, which makes this model a good type for semi-absentee owners, who can come in from time to time to make sure each location is continuing to uphold the standards of your franchise’s brand.

Franchises that use recurring revenue also tend to have strong investor/franchisee support. Dependable revenue streams help promote business stability, which helps businesses weather difficult circumstances like economic recessions and periods of financial inflation. You can take reassurance that your own investment is a sound one as you and your fellow franchisees help maintain your company’s strength through your commitment to the business model and brand.

One final note about the recurring revenue model is that while it’s a good model for some franchises, it doesn’t fit every franchise. The best recurring revenue franchises are ones that provide products and/or services that are needed on a regular basis, rather than one-time purchases or services that aren’t needed frequently. For example, businesses like lawn care services, sports centers/gyms, vehicle maintenance, and cleaning companies are good for recurring revenue models because people regularly need their lawns tended, to go to the gym, have their cars tuned up, and their properties cleaned and maintained. Other businesses like real estate agencies, car dealerships, vacation travel agencies, and building contractors are less suitable for this model because either they rarely have repeat customers, or the time between the need for their services is so long it doesn’t justify the cost of a regular fee.

Is a Passive Income Franchise Right for You?

Starting a passive income franchise may not be cheap or easy, but if it’s set up properly it will eventually start to make money on its own, without constantly needing your hand on the steering wheel. Delegation is the key to proper setup, with dependable managers and staff to handle the day-to-day operations. While full absentee ownership is possible, it’s easier to find a semi-absentee franchise that requires only a small amount of your time. Steady revenue is key to a franchise made for passive income, and the recurring revenue business model is designed to produce exactly that.

Plant the Seeds of Passive Income with GrassRoots Turf

We at GrassRoots Turf are eager for entrepreneurs like you to join our franchising team. We’re a lawn care franchise that utilizes a recurring revenue model, ensuring our franchisees’ revenue streams aren’t at the mercy of the seasons or elements. We also provide our franchisees with exclusive territories for certain markets, based on the population size.

We’re ready to support our franchisees with training, marketing and sales services, management tools, purchasing power, accounting and legal support, ongoing research and development, and more. We want to work with entrepreneurs like you, with a drive to succeed, ability to follow a proven business model, strong sales and customer service skills, strong time management skills, high personal standards, and the ability to meet initial investment requirements.

Contact us today to find out more about your franchising opportunities with GrassRoots Turf!

Posted in Starting a Franchise.

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