From The $100 Startup · Part III, Chapter 12

How to Franchise Yourself

"I'm not a businessman; I'm a business, man."
— Jay-Z

Why buying a franchise is usually a bad deal

The basic franchise pitch runs like this: raise a quarter of a million dollars by emptying your savings, borrowing from family, and maxing out your credit cards. Pay most of that money up front to a company that will generously allow you to work for them. Operate exactly how they tell you — no exceptions. Every decision (who you hire, what you offer, where you locate, what color shirt you wear in "your own business") is defined by the company.

If the business succeeds, you'll make an average of $47,000 a year after three years of scraping by, on the same 50-hour weeks you could have spent at someone else's company with a lot less stress. Your "success" is having bought yourself a job.

If the business fails — which happens more often than franchise companies want to admit — the company takes the store back and resells it. They don't count your failure in their closure statistics. You don't know whether the impressive "still open" rate they advertise represents original owners or new ones, or how many people owe $250,000 they can't repay.

The alternative is building something you actually own and control. Buying into someone else's operation is rarely the opportunity it looks like from the outside. Figuring out how to leverage your own efforts almost always is.

Two paths to franchising yourself

Franchising yourself isn't "doing more." It's being strategic about leverage. There are two main paths.

Nathalie Lussier took path one: reach different people with a new message. After turning down a Wall Street job, she came home to Quebec, dramatically improved her health on a raw-foods diet, and built Raw Foods Witch — a brand built around her own personality (pointed black hat for photo shoots and all). Inside a year it was a $60,000 business.

The problem: "From the outside, it looked like all I talked about was raw foods. No one realized I had done all the programming and really enjoyed the intersection of business and technology." When her raw-foods clients started asking for tech help, she built a second brand for tech consulting under her own name. She restructured Raw Foods Witch to run on 80% autopilot. Same person, two businesses, two audiences. She'd effectively franchised herself.

Brooke Thomas took path two: reach more people with the same message. She founded New Haven Rolfing in Connecticut after running similar practices in California and New York. She filled her client list within four weeks, took on a partner, and works part-time while earning more than $70,000 a year. As a single mother with a young child, the model fits her life.

Then she noticed something. Other wellness providers were less business-savvy than she was. Based on three cities of real-world experience, she built Practice Abundance — a training program for other wellness providers. "Other resources assume that everyone wants to get an MBA," she told me. "The reality is that most of them just want to run their practice better." Two audiences: her individual care clients, and her fellow caregivers who needed non-MBA business advice.

The hub-and-spoke model

If you go the "reach more people with the same message" route, the hub-and-spoke framing is useful for thinking about your online presence.

• The hub is your main website — an e-commerce site, a blog, a community forum, whatever it is. You control the content. You decide the rules. New visitors, prospects, and customers ultimately flow here.
• The spokes (or outposts) are everywhere else: social networks, the comments section of your blog or other blogs, networking events, guest posts. The goal of each spoke is to support the hub.

It's easy to fall into the trap of spending too much time on the outposts. Things change. Outposts lose popularity. Algorithms shift. You own the content you create in your hub. Most of what happens in an outpost is owned by another company.

The simple math of a good partnership

The simplest path to franchising yourself is teaming up with a trusted partner. You don't have to merge businesses. The most common form is a joint venture: two or more people collaborating on a single project. Karol and Adam's $185,755 bundle from Chapter 8 was a joint venture.

In other arrangements, an all-new entity is created and jointly owned. Patrick McCrann and Rich Strauss were both high-end performance coaches for athletes. They teamed up to create Endurance Nation — a training program and community for triathletes. Patrick calls every new member to welcome them; Rich crafts an online training plan. They divide responsibilities by what they're good at.

Ralf Hildebrandt, who runs an international professional-services firm based in Stuttgart, frames the bar: 1 + 1 should equal 3. "A successful partnership should create a combined business which is 33% larger than the sum of what the two individuals could achieve on their own." Otherwise it's subcontracting.

Courtesy of Pamela Slim, a few decisions every joint venture should make at the outset:

• How will the money be divided? Common splits are 50/50, 60/40 (the higher share to whoever does more work), or 30/30/30 with 10% set aside for administration.
• What are each partner's responsibilities?
• What information is shared between partners?
• How will the project be jointly marketed?
• How long does the agreement last?
• How often will the partners touch base to discuss the partnership?

The outsourcing camps

This is the only topic in the entire study that produced wildly divergent opinions. Almost every other theme — bootstrapping, limited planning, the connection between freedom and value — got similar responses from almost everyone. Outsourcing split the room.

Pro-outsourcing

Hiring employees was my biggest challenge as a business owner. I put it off for years and turned away tens of thousands of dollars each year because I was afraid to grow. Finally I realized I'd hit a ceiling. I couldn't make any more money without bringing some members to my team. Since changing the structure, I'm able to accept all of the orders I had to turn away. I'm no longer overbooked. Do I wish I could do it all myself? I used to. But I am so much happier now as part of a team. — Megan Hunt

Jonathan Pincas runs a Spanish food import business and contracts everything possible: warehousing, fulfillment, freelance sales agents on commission, virtual assistants for phone answering. Zero employees. The structure means he could run the business from anywhere — and eventually did, moving from England to Spain.

Jen and Omar (the maps duo from Chapter 6) contracted with an outside printer for their first run. "Our business would literally not exist if we'd tried to print the maps on our own. As demand has increased, our printers have been able to provide additional inventory."

Anti-outsourcing

I actually prefer not to work with contractors, employees, or assistants. My business succeeds on the fact that it is intentionally small. I can fit my whole business into a backpack and take it wherever I go — no office, no stationary, no administrative staff. Keeping my overhead to zero has lowered the risks and kept profits high. — Adam Westbrook

My motto: Never have a boss, and never be a boss. I have an accountant because number crunching is my biggest weakness. Otherwise, I am a company of one. — Brandy Agerbeck

Andy Dunn put it more practically: "My experiences with outsourcing work to remote contractors left me spending nearly as much time managing the work as it would to actually do it myself."

The honest answer

Whether outsourcing is a good fit depends on two things: the business and the owner.

Repetitive tasks can often be outsourced well. Customer relationships usually can't. And your own temperament matters as much as the business model — some people thrive with a team, others genuinely work better alone. There's no universal right answer. Decide for yourself.

Affiliate programs: pay your partners properly

Affiliate programs — where partners promote your work in exchange for a commission — can be an easy way to franchise yourself. Most are weak because the merchant pays small commissions, leaving little incentive for the affiliate. The fix: pay much higher commissions, but expect more from the partner.

For years I've paid 51% commission to my affiliates, on the principle that they should earn more than me for promoting my work. I also make it clear they need to do more than slap a link somewhere — they should use the product, write a real review, and offer some kind of bonus to people who buy through their link. The combination attracts higher-quality partners and produces steady income that doesn't depend on what else is happening in my business.

The rise and fall of Copley Trash Services

Spencer and Hannah Copley, ages twelve and ten, lived with their parents on a hospital ship deployed to West Africa. Living on the ship meant taking your own garbage to a dumpster on the dock — often a long walk under hot sun, often to a full dumpster. Spencer had an idea: $1 a week, Tuesdays and Fridays, leave your garbage in the hall and the Copley sibling team handles it. Twenty-five customers signed up in a few weeks. Recurring income of $25 a week, split three ways: 10% as a tithe to a local orphanage, 40% to the puppy savings fund for when they returned home to Washington state, and 50% for discretionary spending (mostly Snickers bars and video games).

When the family went home to Washington state on three-month leave, Spencer and Hannah handed the business to two other kids on the ship. Service was intermittent. No notices when pickups were missed. Customers opted out. Bill collection declined. The business unraveled in the absence of its founders and without a written agreement.

The lesson generalizes. Hand a business off without an agreement and without the founder's attention, and it tends to come apart. Spencer and Hannah were ten and twelve. Adults often don't do much better.

Key takeaways

• Don't buy someone else's franchise. Build your own.
• Franchise yourself two ways. Reach more people with the same message, or reach different people with a new message.
• Use the hub-and-spoke model. Your website is the hub you own. Everything else is an outpost. Make the outposts feed the hub, not the other way around.
• For partnerships, 1 + 1 should equal 3. Anything less is subcontracting.
• Outsourcing is personal. Some founders thrive with a team. Others work better alone. Decide for yourself based on the business and your temperament.
• Pay affiliates well — and expect more. 51% commissions and a real bonus from the partner outperforms 5% commissions and a slapped-up link, every time.

Where this fits in the book

"How to Franchise Yourself" sits in the middle of Part III. Chapter 11 covered tweaks for growing solo. This chapter covers leverage — second businesses, partnerships, outsourcing, affiliates. Chapter 13 (Going Long) covers the long-term decision between staying small, going medium, and building for an eventual sale.

Frequently asked questions

What does "franchising yourself" mean?

Taking your skills, activities, and passions to a higher level so they create better returns than you could solo. It's not "doing more" — it's strategic leverage. Either reach more people with the same message or reach different people with a new message.

What is the hub-and-spoke model?

Your main website is the hub — you own the content and the rules. Everywhere else (social networks, forums, comments, guest posts) is a spoke. The goal of each spoke is to support the hub. Don't fall into the trap of investing too much in outposts you don't own.

Should I hire employees or stay solo?

The only topic in the 1,500-person study that produced wildly divergent answers. The honest answer depends on the kind of business you're building and your own personality. A business of repetitive tasks may benefit from outsourcing. A business of personal relationships often doesn't. Some founders simply work better alone.

How should I structure a partnership?

Use the one-page partnership agreement above: who, what, revenue split, life of agreement, sale/support/marketing duties, timeline. Keep it simple. The relationship matters more than the legal language. For higher stakes, get an attorney involved.

Where does this fit in The $100 Startup?

Chapter 12, in Part III. Between Chapter 11 (tweaks) and Chapter 13 (the long-term shape of the business). The chapter covers the four main leverage options: second businesses, partnerships, outsourcing, and affiliate programs.