Manager-operated or manager-run refers to a franchise unit that is overseen by a hired manager rather than the franchisee themselves. In this arrangement, the franchisee owns the business but delegates daily operations to a professional manager. This model allows for semi-passive ownership within the framework of the franchise agreement.
In franchising, a manager-operated or manager-run business is one where the franchisee appoints a qualified individual to handle the day-to-day management of the franchise location. The franchisee remains legally responsible for the business and continues to oversee high-level decision-making, but the manager handles staffing, customer service, inventory, and operational execution. This model is commonly used by multi-unit owners or investors who prefer not to be involved in the daily operations of each unit. Franchisors may have specific requirements for who can serve as the manager, including minimum experience or training completion. The franchise agreement may also require prior approval of the manager and stipulate ongoing performance standards to ensure brand consistency.
Additional Definition: A franchise system that does not require the franchisee to be personally involved in the daily operations of the franchised unit on a full-time basis. An operation that is well suited for investors and part-time involvement.
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The manager-operated model became prominent as franchising expanded beyond single-unit ownership in the 1980s and 1990s. As entrepreneurs began acquiring multiple locations or operating franchises as part of diversified investment portfolios, they sought ways to delegate operational control without compromising brand standards. Franchisors responded by formalizing manager qualifications, training programs, and approval processes within the franchise agreement. Today, manager-run models are common in food service, fitness, hospitality, and retail franchises, especially where absentee or semi-absentee ownership is part of the business model.
A manager-operated or manager-run franchise allows the owner to delegate daily responsibilities while maintaining overall control and accountability. This model is ideal for multi-unit operators or investors seeking semi-passive involvement, provided the franchisor’s standards for management and oversight are strictly followed.