Tips for Buying a Home-Based Franchise

Buying a home-based franchise could be your ticket to having your own home business. But how do you know which ones are legitimate, and how do you choose the one that’s right for you? Use these tips to analyze home-based franchise opportunities so you make the best choice.

You think you’ve found the perfect business, but you’ll have to run it out of your home. Additionally, you have to buy the business rather than start it from scratch. That’s not a bad thing, let’s distinguish between a franchise and a business opportunity.

Business Opportunity or Franchise: What’s The Difference?

There is a distinct difference between a franchise and a business opportunity. Let’s examine briefly what they both entail.

A franchise is a licensing agreement with an existing business to operate under that business name. For instance, Vanguard Cleaning Systems is a home-based franchise in the commercial cleaning sector. If you were to purchase a franchise with this company, you would be operating as Vanguard Cleaning Systems and acquiring your own customers under that company’s name.

A business opportunity typically requires an upfront investment, though not always as big an investment a franchise. However, you are not adopting a business identity as with a franchise.

Many network marketing opportunities are considered business opportunities because you acquire the right to sell products and recruit members but do not adopt the name of the parent organization. You operate your business in your own name while representing another company’s products. Other types of business opportunities include vending machines, import-export businesses, and wholesaling.

RELATED: How to Avoid Work at Home and Business Opportunity Scams

Be Prepared to Work Hard

The most important thing to understand about buying a home-based franchise is that you are buying a job. If you are not prepared to work hard, you should consider other options.

Unlike a typical franchise—say, for instance, a fast food restaurant—you will not commute. That means you’ll need some discipline. You may be tempted to lie in bed an extra hour or not treat your franchise like a real business. It will require an extra amount of diligence to ensure that you tackle the challenges of running a franchise from your home.

Since you can’t expect to treat your home-based franchise like a location-based business, it is imperative that you be involved in every detail of your business right from the get-go. You cannot just hire a manager to run the daily operations. If you are not prepared to be heavily involved in the day-to-day operations of your business, then a home-based franchise is not for you.

How to Identify the Right Home-Based Franchise for You

Buying a home-based franchise is an investment. Therefore, you should analyze the potential for a return on your investment. Don’t go into it emotionally blindfolded. Think like a business professional.

RELATED: Choosing the Home Business That’s Right for You 

What should you consider as you analyze home-based franchise opportunities?

  • First, what interests you? Start with your passions and make a list. In a separate column, make a list of business sectors that interest you but are not necessarily passionate about. You may have a passion for origami, but will you be able to find a suitable franchise opportunity as an origamist? You must be realistic.
  • After making your two lists, prioritize your passions and interests, but keep the lists separate.
  • Check home-based business regulations in your state. Before you go any further, you should determine whether it will be worth your time to pursue a home-based business. If you can’t meet regulations because your home is too small or you can’t afford licensure, etc., then nothing else matters.
  • Starting with your passions, then your interests, make a list of franchise opportunities that match those. You may find two franchise opportunities that match your first passion and five that match your second. You may find ten that match an interest. You’re not evaluating opportunities at this stage. You are simply making lists, so create these lists and eliminate undesirable opportunities as you go.
  • Write down how much investment you need for each franchise opportunity on your list. Will you need a loan or other funding to start a franchise? Scratch off any opportunities that are not realistic or that don’t fit into your investment comfort zone.
  • What are the requirements of the franchise? Are there annual fees? Will you need to travel? What if you decide to terminate your franchise at some point? Will that cost you anything? This stage of research may require calling a franchisor and asking questions. Get as much information as you can about each potential franchise opportunity.
  • Do you have the skills, resources, and interest strong enough to commit to each franchise opportunity on your list? Be brutally honest here. If you do not have the skills, for instance, to make a certain type of franchise work, then it doesn’t matter what your interest is. You will not be able to succeed at something if you are not equipped to handle it on a daily basis. You may be able to learn the skills but consider the learning curve. You may struggle financially before you see any profits.
  • Finally, narrow your list down to two or three franchises based on passion, interests, financial viability, resources available, and your realistic chances for success. At this stage, you’ll also need to consider an exit plan for each of your options. If you see no way out of an opportunity that will minimize potential investment losses or protect you from financial ruin, then cut that option off your list. It is important to consider how you will get out of any business before it is necessary in addition to starting a franchise LLC.


It is important to perform your due diligence. Don’t make important business decisions on emotion. If necessary, hire a franchise consultant to help you evaluate your opportunities. Don’t just choose a home-based franchise because you think it will make you money. If you lose interest, you’re stuck with your contract and obligations to the franchisor.

Fun Fact: Did you know that you can even outsource legal tasks like LLC formation to platforms like ZenBusiness or MyCorporation?

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