Blog • Perspective
Franchise vs. Corporate-Owned: Choosing the Right Expansion Model for Your Brand
By Shanalie Wijesinghe . Dec.09.2025
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Do you want to grow fast or do you need to maintain control? Your answer will guide your path toward expansion.
You’ve built a solid foundation for your beauty business, and now you’re ready to grow. But what’s the right path forward? Do you keep control of your expansion efforts, knowing that growth will be limited by the resources you have available? Or do you offset that responsibility and allow others to help you expand, even if that means giving up some control of your business?
Your answers to those questions help you determine whether a franchise or corporate-owned business model is right for your brand. Don’t know the answers? We’re here to help. Read on and we’ll walk you through both options so you can make the best choice.
Key takeaways
Corporate-owned expansion gives you full control and full revenue, but growth is slower and requires significant capital, staffing, and hands-on management.
Franchising shifts much of the financial and operational risk to franchisees, allowing faster expansion, but you sacrifice some control and receive only a percentage of the revenue.
Your choice comes down to your priorities: speed versus control, ownership versus shared risk, and how involved you want to be in day-to-day operations.
Franchising requires strong systems, clear brand standards, and ongoing support, while corporate-owned growth demands substantial resources and direct oversight of each location.
A hybrid model can offer a balanced path, giving you broader reach while still maintaining strategic control where it matters most.
Franchise or corporate-owned? Exploring your options
Let’s start by walking through the options you have for expansion.
Corporate-owned
According to the IRS, a corporation “conducts business, realizes net income or loss, pays taxes, and distributes profits to shareholders” as a single entity, whether that business is run by an individual or a group of people. These entities can take the form of standard corporations (C corporations or S corporations, which have different taxation processes) or limited liability corporations (LLCs).
Whichever form of corporation you run, you are the full owner of any location you open under this entity. They’re an extension of your business, and you’re responsible for hiring, training, managing, and paying employees of those locations. Opening a new location can take a significant amount of time and resources to set up, from planning where to open, to staffing, and so on.
This process, along with the resource requirements, typically makes expansion slow, as you want to ensure that each location you build has a solid foundation. Expanding too quickly can leave you over-leveraged, meaning you won’t have the resources necessary to ensure any of your locations are successful, let alone the new one you just opened.
However, this risk brings with it its own set of rewards. For one, you have full control over how they operate, who runs them, and so on. You’ll also reap the full rewards of any successful location, as all revenue they generate belong to the corporation.
Franchise
What if you’d rather offset some of the risk of expansion or you’re more interested in building your brand than focusing on day to day operations? If so, then a franchise is probably a better fit for you.
A franchise is a second party company that operates under your branding through a licensing deal. Freecoat Nails is a perfect example of what a growing beauty business franchise looks like. Potential franchise owners can shoulder some of the financial risks associated with starting a new business, but will enter the market with an established brand and processes that are already in place and ready to go.
To bring on a franchisee, your business sets some terms and conditions up front that a franchisee must agree to in order to operate with your branding. These include:
Upfront signing costs to show that you have enough operating capital to set up a location.
Royalty fees that a franchisee pays your business, typically done annually.
Products and pricing terms that locations must adhere to. For example, franchisees might be required to use a specific brand of hair care products in order to maintain consistency between locations. Pricing must also typically be set at or above a specific threshold so franchises don’t undercut corporate-owned locations.
Operating policies that dictate how businesses conduct specific processes, like bookings, refunds, and even how you place signage within the location.
Outside of these terms, however, franchises own and operate the business separate from your corporate entity, so you’re giving up some of the control you would normally have within a corporate-owned structure.
You can operate as a hybrid, directly managing corporate-owned locations while allowing franchises to join and grow your business, or you can take a fully hands-off approach and let franchises do the bulk of operations for you. It’s your call.
Breaking down the options
Franchise | Corporate-Owned | |
Investment required | Minimal: You need to develop the infrastructure to onboard and support franchised locations. However, the franchisee is responsible for most of the upfront and ongoing costs. | High: You are responsible for the costs associated with expansion, including strategy, building, staffing, and maintenance. |
Rate of expansion | Variable: Franchising allows you to open up multiple locations simultaneously, as long as there is interest in your business model. As a result, expansion can occur rapidly. | Slower: Expansion is limited by the resources you have at your disposal — whether that’s time, capital, or personnel — as well as your own personal interest in growing the business. |
Brand Control | Moderate: Contract agreements include terms that dictate what franchisees can or cannot do regarding the brand, the items they sell, pricing, marketing, and other factors. Outside of that agreement, franchisees have freedom regarding hiring and operations. | Complete: You have full control over additional locations. While you may not have direct oversight into operations, individual supervisors will either report to district managers or directly to you, depending on the size of the business. You dictate how locations operate and other factors like pricing and marketing. |
Revenue generation | Lower: This is the trade-off. While expansion is easier and less costly for you, you will only make a percentage of the revenue that franchised locations generate as dictated by the terms of your agreement. | Higher: All revenue a location generates belongs to the corporation, so you get to reap the full rewards if performance is high. |
Operational Complexity | High: As a franchiser, you’re effectively managing individual, relatively autonomous businesses. That means you need to have structure in place to develop those relationships, maintain contact, and require regular training to ensure adherence to your brand values as much as possible. Additionally, you need legal infrastructure in place to manage and enforce contractual obligations. | Low: While managing a corporation has its own level of complexity, the chain of command is entirely based on your org chart. That means you have a direct relationship with the people you employ, allowing you to exert more control over who is in those roles and what actions they’re allowed to take. |
Risk management | Shared: The franchisee takes on the bulk of financial risk in operating and maintaining the location, while you manage and develop the overall health and direction of the brand. | Full: While you reap all of the rewards of any location you open, you also bear the entirety of the risk. You will need to keep a close eye on how your locations are performing to understand whether or not you need to invest in (or potentially close) one or more of your locations. |
Which one’s right for you? Ask yourself these questions
Still trying to figure out which expansion model fits your brand? Try asking yourself these thought-starters.
What’s more important to achieving your goals: Growth or control? If expansion is your main focus, then starting a franchise-based business is probably the best fit. If you need to control where and how you’re going to grow, then you’ll want to stay corporate-owned.
What resources do you have available? Do you need help shouldering financial risk? Bringing on franchisees can help you mitigate some of that risk in exchange for some control over operations. If you’ve got the resources available to expand, you may want to stick to the corporate model.
How fast do you want to grow? Franchises can help you grow much faster than corporate-owned structures.
Are you in this for the long haul? Do you want to grow along with your business or is your focus elsewhere? Corporate-owned businesses require a more hands-on approach to expansion but can offer greater dividends when handled correctly.
Do you have any partners? Make sure any stakeholders or partners are involved with the decision to choose a corporate-owned or franchise-based structure.
Both expansion models are valid methods for growing your beauty business, and can even work in conjunction if you so choose. But whichever model you choose, finding success requires a keen eye and a steady hand so you can maximize the impact of the methods you use to grow. Be sure to lean on your client management platform to provide you with the data and insights you need to grow your business with purpose.
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